PAPERS 

to 

I:KI-ATIX«;  TO  THK 


STATE     LOAN 


TO   THK 


BOSTON,  HARTFORD  AND  ERIE 
RAILROAD    COMPANY. 


1868. 


BOSTON: 

WRIGHT    &    POTTER,    STATE    PHINTKHS. 
No.    4    SPRING    LANK. 

1868. 


UCSB   LIBRARY 


RELATING  TO  THE 


STATE     LOAN 


BOSTON,    HARTFORD    AND    ERIE 


(H 


prog. 


6 


BOSTON: 

WRIGHT    &    POTTER,    STATE     PRINTERS, 
No.   4   SPRING   LANE. 
1868. 


COMMUNICATION 

OF 

HIS  EXCELLENCY  GOVERNOR  BULLOCK, 

TO  THE 

HONORA.BLE       C  O  TIIST  C  I  L  . 


COMMONWEALTH    OP    MASSACHUSETTS. 

EXECUTIVE  DEPARTMENT,  BOSTON, 
October  14, 1868. 

To  the  Honorable  Council : 

The  various  matters  which,  by  the  act  to  aid  the  construction 
of  the  Boston,  Hartford  and  Erie  Kailroad,  chapter  284  of  the 
acts  of  1867,  must  be  made  to  appear  to  the  satisfaction  of  the 
Governor  and  Council  before  the  issue  of  any  scrip,  are  recapit- 
ulated in  the  report  of  the  Committee  of  the  Council. 

Certain  of  these  matters  are  required  by  the  act  to  be  made 
to  appear  to  the  satisfaction  of  the  Governor  and  Council  and 
the  Attorney  General ;  and  certain  others  to  the  satisfaction  of 
the  Governor  and  Council  and  the  Commissioners  appointed 
under  the  sixth  section  of  the  act. 

On  the  31st  of  July,  the  Commissioners  made  an  extended 
report  upon  the  whole  subject,  and  in  conclusion  expressed  the 
opinion  that,  if  the  means  and  resources  of  the  company  should 
be  honestly  and  judiciously  used,  and  with  a  reasonable  degree 
of  energy,  enterprise  and  economy,  the  road  might  be  thereby 
constructed  and  moderately  equipped,  and  they  accordingly 
recommended  the  allowance,  by  the  Governor  and  Council,  of 
a  loan  of  scrip  for  the  work  already  done  and  equipment 


purchased.  This  report  has  been  before  the  committee  of  the 
Council,  and,  with  the  documents  which  accompany  it,  is  here- 
with submitted,  marked  A. 

These  documents  were  transmitted  to  the  Attorney  General, 
with  the  request  that  he  would  report  upon  the  various  matters 
in  which  his  concurrent  action  was  required.  His  reply  has 
been  before  the  Committee  of  the  Council,  and  is  herewith 
submitted,  marked  B. 

It  was  quite  obvious  to  my  mind  that  it  was  the  design  of  the 
legislature  to  secure  the  separate  and  responsible  judgment  of 
the  Governor  and  Council  upon  each  of  the  particulars  named 
in  the  act  as  necessary  to  be  shown.  It  also  became  early 
apparent  that  the  principal  questions  concerning  which  doubts 
would  exist,  were,  whether  the  requirements  of  the  statute 
concerning  the  payment  and  cancellation  of  the  mortgage 
debts  secured  by  the  underlying  mortgages  'on  that  part  of  the 
road  situate  this  side  of  Southbridge  and  "Willimantic  were 
complied  with,  and  whether  the  company  has  satisfactorily 
shown  that  they  would  be  able,  without  further  aid  from  this 
Commonwealth,  to  complete  their  line  from  Boston  to  Fishkill 
before  May  27, 1872. 

Deeply  impressed  with  the  responsibility  imposed  upon  me 
in  respect  to  these  questions,  I  have  given  my  careful  and  per- 
sonal attention  to  the  examination  of  the  details  which  could 
throw  light  upon  them. 

The  attention  of  the  Committee  of  the  Council  was  called  to 
the  considerable  discrepancy  which  was  found  to  exist  in  the 
various  statements  of  the  bonds  now  outstanding,  which  are 
secured  by  the  underlying  mortgages  above  referred  to.  This 
discrepancy  has  been  largely  relieved  by  subsequent  explana- 
tions ;  and  the  recommendation  of  the  Committee  of  the 
Council,  that  a  bond  with  personal  sureties  should  be  required, 
in  the  penal  sum  of  one  million  of  dollars,  to  protect  the  fran- 
chise and  property  described  in  the  Berdell  mortgage  from  the 
uncancelled  bonds,  obviates  the  objections  intimated  in  this 
report  of  the  Attorney  General,  and  dispenses  with  the  neces- 
sity of  a  precise  ascertainment  of  the  number  of  bonds  now 
outstanding,  which  indeed  appears  impracticable. 

The  Committee  of  the  Council  also  became  satisfied  that  the 
company  will  be  able  to  complete  their  line  of  road  to  Fishkill 


within  the  time  specified  by  the  act,  without  further  aid  from 
this  Commonwealth,  as  appears  by  their  report,  which  is  here- 
with submitted,  marked  C. 

Wishing,  however,  rigidly  to  test  the  conclusion  to  which  the 
Committee  of  the  Council  had  come  upon  this  latter  subject,  I 
addressed  to  the  Commissioners  a  supplementary  communica- 
tion, which  expressed  the  doubts  that  still  remained  in  my 
mind,  and  the  want  of  full  information,  which,  as  it  seemed. to 
me,  still  existed  upon  certain  facts  bearing  upon  the  question ; 
and  this  communication,  with  the  reply  of  the  Commissioners, 
is  also  submitted  herewith,  marked  D. 

By  this  reply,  the  validity  of  the  acceptances  of  the  Erie 
Railroad  did  not  appear  to  be  established,  and  I  was  not  able 
quite  to  concur  with  the  opinion  of  the  Commissioners  that  it 
would  seem  a  fair  estimate  to  offset  the  accruing  interest 
money,  which  the'  company  would  apparently  be  obliged  to 
pay,  against  the  earnings  of  the  road.  Up  to  this  time  it  had 
been  assumed  that  the  full  time  allowed  by  the  Act  for  the 
completion  of  the  road  to  Fishkill  might  be  occupied  in  doing 
the  work.  It  was  obvious  that  an  amount  of  about  $3,000,000 
would  become  due  for  interest  before  that  time.  By  the  last 
exhibit  of  the  Commissioners,  the  sums  to  be  paid  by  the  com- 
pany exceeded  their  pecuniary  resources,  now  within  their 
control.  There  were  also  certain  other  matters  of  detail  con- 
cerning which  I  desired  further  information.  I  therefore  pre- 
sented certain  inquiries  to  the  officers  of  the  company,  which, 
with  their  replies  thereto,  and  an  accompanying  opinion  of  Mr. 
Evarts,  are  herewith  submitted  to  you,  marked  E. 

By  these  replies,  it  appeared  that  it  is  the  purpose  of  the 
company  to  complete  their  line  of  road  to  Fishkill  during  the 
next  year  ;  and,  upon  personal  conference  with  Mr.  Ashburner, 
one  of  the  Commissioners,  and  himself  a  civil  engineer  of  large 
experience  in  this  kind  of  work,  I  am  satisfied  that  this  maybe 
done.  This  early  completion  of  the  road  will  greatly  diminish 
the  amount  of  interest  to  be  paid. 

This  opinion  of  Mr.  Evarts  was  submitted  to  the  Attorney 
General,  and  he  deems  it  satisfactory  to  establish  the  liability 
of  the  Erie  Railroad  Company  for  the  bonds  which  they  have 
received,  as  appears  by  his  letter  hereto  appended,  and  marked 


F.  To  this  is  added  another  communication,  from  the  Attor- 
ney General,  marked  G. 

Upon  the  whole  case,  as  thus  presented,  the  question  then 
remains,  what  rule  is  to  be  adopted  as  a  guide  by  which  to 
determine  whether  the  company  will  be  able  to  complete  their 
line  of  road  to  Fishkill,  without  further  aid  from  the  Common- 
wealth ?  Are  they  to  be  required  to  demonstrate  mathemati- 
cally an  actual  present  ability,  from  means  now  within  their 
control,  to  meet  the  necessary  disbursements  ?  Or,  do  they 
meet  the  requirement  of  the  statute  by  making  it  appear  to 
the  satisfaction  of  the  reason  and  conscience  that  in  all  human 
probability  they  will  be  able  to  accomplish  the  work  ?  Accept- 
ing the  latter  as  the  true  rule,  bearing  in  mind  the  valuation 
which  the  public  have  now  for  several  months  continuously 
put  upon  the  shares  of  the  company,  and  believing  that  this 
indicates  the  existence  of  a  borrowing  capacity  on  the  part  of 
the  company  yet  remaining,  which  is  equal  to  the  difference 
between  the  required  disbursements  and  their  present  actual 
means,  I  am  prepared  to  submit  for  you  decision  the  subjoined 
order. 

I  have  given  to  the  subject  long  and  patient  investigation,  an 
amount  of  time,  care  and  thought  by  no  means  represented 
by  the  brief  terms  in  which  I  have  here  stated  my  conclusion. 
I  believe  the  documents  hereto  appended  will  sustain  the  result 
I  have  reached ;  and  I  have  confidence  that  the  progress  and 
completion  of  this  road,  and  its  future  working  operations,  will 
confirm  my  opinion  of  its  importance  in  the  commercial  rela- 
tions of  the  Commonwealth. 

ALEXANDER  H.  BULLOCK. 

Ordered,  That  upon  the  due  cancellation  of  the  bonds  taken 
up  by  the  Boston,  Hartford  and  Erie  Railroad  Company,  which 
were  secured  by  the  underlying  mortgages  referred  to  in 
chapter  284,  section  2,  of  the  acts  of  1867,  or  the  stamping  of 
them  in  a  form  and  manner  to  be  approved  by  the  Governor,  so 
as  effectually  to  prevent  their  being  negotiated  hereafter, — such 
cancellation  or  stamping  to  be  done  under  the  direction  of  the 
commissioners, — and  upon  the  execution  of  a  bond  with  per- 
sonal sureties  to  the  satisfaction  of  the  Governor  and  Council 


in  the  penal  sum  of  $1,000,000,  with  condition  as  provided  in 
the  same  section  above  referred  to,  and  upon  the  execution  of 
the  agreement  mentioned  in  section  3  of  the  same  statute, 
and  the  delivery  of  the  Berdell  mortgage  bonds  therein  pro- 
vided for,  scrip  of  the  Commonwealth  shall  be  issued  and 
delivered  to  the  treasurer  of  that  company  to  the  amount  of 
$100,000,  to  be  expressed  in  the  currency  of  Great  Britain. 


[A.] 

To  His  Excellency   GOVERNOR  BULLOCK  and  the    Honorable 

Council : 

The  undersigned,  having  been  appointed  in  pursuance  of  the 
Act  of  the  General  Court  of  May  27, 1867,  among  other  things, 
"  to  advise  and  inform  the  Governor  and  Council  in  reference 
to  all  matters  and  things  they  are  called  upon  to  ascertain  and 
verify  under  the  terms  and  provisions  of  this  Act,"  respectfully 
report  that  they  have  endeavored  to  ascertain  the  history  and 
present  condition  of  the  various  railroad  corporations  or  roads 
which  form  constituent  parts  of  the  present  corporation  and 
road  of  the  Boston,  Hartford  and  Erie  Railroad  Company. 

They  have  had  in  view,  also,  the  ulterior  consideration,  how 
far  the  Governor  and  Council  and  Commissioners  should  be 
satisfied  that  said  railroad  company  will  be  able  to  complete  a 
line  of  railway  from  Boston  to  Fishkill,  and  that  the  same  will 
be  completed  within  five  (5)  years  from  the  passage  of  said  Act. 

In  making  their  investigations,  the  Commissioners  have  been 
aided  in  all  things  by  the  officers  of  the  company,  who  have 
answered  all  inquiries  and  exhibited  all  documents  and  papers 
which  the  Commissioners  have  called  for,  without  hesitation  or 
apparent  reserve. 

The  various  steps  and  measures  which  the  Commissioners 
have  taken  to  arrive  at  their  results,  they  are  induced  to  state, 
somewhat  in  detail,  that  the  Governor  and  Council  may  be  able 
the  more  readily  to  judge  how  far  the  conclusions  to  which  the 
Commissioners  have  come  are  well  founded. 

The  Boston,  Hartford  and  Erie  Railroad,  if  completed  as 
contemplated  in  said  Act,  will  extend  from  tide-water  in  Boston 
by  Blackstone,  Willimantic,  Hartford  and  Waterbury  to  Fish- 
kill,  and  from  Providence  by  Plainfield  to  Willimantic,  with  a 
branch  from  Blackstone  to  Southbridge.  A  plan,  which  accom- 
panies this  Report,  will  furnish  an  outline  of  these  united  lines 
between  Providence  and  Fishkill.  and  Boston  and  Fishkill,  with 
the  branch  to  Southbridge.  The  plan  will  also  show  a  line  of 
chartered  road,  not  yet  begun,  from  Willimantic  to  New  Haven, 
and  one  from  Woonsocket  to  Putnam,  upon  which  considerable 


work  has  been  done,  charters  for  which  are  held  by  the  Boston, 
Hartford  and  Erie  Company. 

A  reference  to  this  plan  will  also  serve  to  explain  the  various 
Acts  of  incorporation,  which  it  becomes  necessary  to  refer  to  in 
this  connection,  in  order  to  trace  the  history  of  the  present 
corporation. 

Beginning  with  the  part  of  the  road  which  lies  in  Massachu- 
setts, the  first  Act  seems  to  have  been,  incorporating  Walpole 
Railroad  from  the  Dedham  Branch  to  Walpole,  in  1846, 
(c.  231.)  In  1847;  (c.  252,)  Norfolk  County  Railroad  was 
incorporated  from  Walpole  to  Blackstone,  and  the  Walpole 
Railroad  authorized  to  unite  with  it,  and,  as  the  papers  show, 
this  was  done.  In  1849,  (c.  194,)  Southbridge  and  Blackstone 
Railroad,  from  Blackstone  to  Southbridge,  was  incorporated. 

In  1850,  (c.  268,)  the  Midland  Railroad  was  incorporated 
from  the  terminus  of  the  Norfolk  County  Road  to  Boston,  and 
this  was  authorized  to  unite  with  the  Norfolk  County  and 
Southbridge  Roads,  which  union  appears  to  have  been  accom- 
plished in  1853  under  the  name  of  the  "  Boston  and  New  York 
Central  Railroad." 

In  1858,.  (c.  60,)  this  united  road  took  a  new  name  under  a 
new  incorporation,  viz. :  "  Midland  Railroad  Company." 

In  1861,  (c.  155,)  the  "Midland  Land  Damage  Company" 
was  incorporated  to  assume  the  property,  &c.,  of  the  Midland 
Railroad  Company,  which  appears  to  have  been  done.  And  in 
1863,  (c.  116,)  this  corporation  was  changed  to  that  of  "  South 
Midland  Railroad  Company,"  and  this  corporation  was  united 
with  the  Boston,  Hartford  and  Erie  road  in  1863,  as  appears 
by  their  deed  on  record,  which  is  referred  to  in  the  Act  of  1865, 
(c.  275.) 

One  other  line  of  railroad  in  this  State,  which  forms  a  part 
of  what  is  embraced  under  the  charter  of  the  Boston,  Hartford 
and  Erie  road,  consists  of  the  "  Charles  River  Branch  Rail- 
road," incorporated  in  1849,  (c.  170,)  from  Boston  and  Wor- 
cester Railroad  in  Brookline  to  Dover,  and  this  was  authorized 
to  unite  with  the  Charles  River  Railroad  by  an  Act  of  1851, 
(c.  297,)  extending  to  Bellingham,  under  the  name  of  the 
"  Charles  River  Railroad."  In  1855,  this  road  was  authorized 
(c.  105,)  to  extend  its  line  to  the  line  of  Rhode  Island,  and  to 
unite  with  a  road  incorporated  in  Rhode  Island,  called  the  New 

2 


York  and  Boston  Railroad,  and  the  union  of  these  was  con 
*  firmed  by  Act  of  1856,  (c.  238.) 

Passing  now  to  the  parts  of  said  road  situate  in  Rhode  Island, 
and  chartered  under  the  Acts  of  that  State,  the  legislature,  in 

1846,  incorporated  a  railroad  called  the  "  Providence  and  Plain- 
field  Railroad,"  extending  from  Providence  to  Connecticut  line, 
and  in  1852  confirmed  the  union  between  that  and  the  Hart- 
ford, Providence  and  Fishkill  Railroad,  chartered  in  Connecti- 
cut.    The  Hartford,  Providence  and  Fishkill  road  was  subse- 
quently united  with  the  Boston,  Hartford   and  Erie  road  in 
Connecticut,  and  this  union  was  confirmed  by  Act  of  Rhode 
Island  in  1865. 

In  1866,  the  legislature  of  Rhode  Island  authorized  the  Bos- 
ton, Hartford  and  Erie  Railroad  to  locate  and  construct  the 
railroad  which  had  been  granted  to  the  Woonsocket  Railroad 
Company  to  Pascoag  and  the  line  of  Connecticut. 

In  1858,  the  legislature  of  Rhode  Island  confirmed  what  is 
called  a  union  and  merger  of  the  Woonsocket  Union  Railroad 
with  the  New  York  and  Boston  Railroad  in  Connecticut,  and 
recognized  the  union  of  these  with  the  Charles  River  Railroad 
in  Massachusetts,  forming  thereby  one  company,  under  the 
name  of  the  "  New  York  and  Boston  Railroad  Company." 

The  history  of  the  parts  of  this  railroad  which  are  within  the 
State  of  Connecticut  appears  to  be  as  follows : 

In  1883,  the  "  Manchester  Railroad  "  was  incorporated.     la 

1847,  its  charter  was  renewed  under  the  name  of  "  Hartford 
and  Providence  Railroad,"  and  to  extend  its  road  to  Williman- 
tic,  and  in  1848  it  was  authorized  to  extend  its  road  to  the 
eastern  line  of  the  State  of  Connecticut. 

In  1845,  the  New  York  and  Hartford  Railroad,  from  Hartford 
to  the  west  line  of  the  State,  was  incorporated,  and  in  1849 
was  united  with  the  Hartford  and  Providence  Railroad,  under 
the  name  of  "  Hartford,  Providence  and  Fishkill  Railroad ;  " 
this  union  was  confirmed  by  Act  of  1852. 

In  1846,  the  "  New  York  and  Boston  Railroad  "  was  incorpo- 
rated from  New  Haven  through  Middletown  to  the  east  line  of 
the  State,  and  in  1849  it  was  authorized  to  connect  and  unite 
with  other  roads.  Upon  the  accompanying  map,  this  road  is 
laid  down  from  New  Haven  to  Willirnantic,  but  a  part  only  of 
it  has  yet  been  wrought.  In  1864,  the  legislature  of  Connecti- 


11 

cut  extended  the  time  of  completing  it,  and  renewed  its  char- 
ter. In  1857,  "  Thompson  and  Willimantic  Railroad "  was 
incorporated,  uniting  the  lines  or  tracks  of  the  Boston  and  New 
York  Central  with  the  New  York  and  Boston  Railroad.  This 
is  indicated  upon  the  accompanying  map  as  beginning  at  "Willi- 
mantic and  extending  through  Putnam  to  meet  the  extended 
line  of  road  from  Boston  to  Blackstone. 

In  1863,  the  Boston,  Hartford  and  Erie  Railroad  was  incor- 
porated by  the  legislature  of  Connecticut,  and  was  organized 
July,  1863.  In  July,  1863,  the  corporation  purchased  and 
acquired  the  property,  franchise,  <fcc.,  of  the  Hartford,  Provi- 
dence and  Fishkill  Railroad.  This  was  ratified  by  Rhode 
Island  in  1865. 

In  September,  1863,  the  Southern  Midland  Railroad  Company 
conveyed  its  franchise  and  property  to  the  Boston,  Hartford  and 
Erie  Railroad  ;  in  the  same  month,  the  same  thing  was  done  by 
the  Thompson  and  Willimantic  Railroad. 

In  December,  1861,  the  Boston,  Hartford  and  Erie  Railroad 
was  united  with  the  New  York  and  Boston  Railroad,  and  was 
authorized  by  an  Act  of  the  legislature  of  Connecticut  to 
extend  its  road  from  Putnam  to  the  line  of  Rhode  Island. 

In  1864,  by  an  Act  of  the  legislature  of  New  York,  the  Bos- 
ton, Hartford  and  Erie  Railroad  was  authorized  to  unite  with 
and  purchase  the  "  Boston,  Hartford  and  Erie  Extension  Rail- 
road," and  the  "  Boston,  Hartford  and  Erie  Ferry  Extension  " 
franchises,  these  being  corporations  Created  in  the  State  of  New 
York,  and  a  purchase  was  accordingly  made  by  the  Boston, 
Hartford  and  Erie  Railroad  of  the  franchise,  &c.,  of  the  Boston, 
Hartford  and  Erie  Extension  Railroad  in  June,  1864. 

By  the  action  of  the  legislature  of  Massachusetts,  during  its 
last  session,  the  Boston,  Hartford  and  Erie  road  was  estab- 
lished as  a  corporation  in  Massachusetts,  as  by  reference  to  the 
Acts  of  the  general  court  will  appear. 

The  legislative  Acts,  as  well  as  the  deeds  and  contracts,  and 
the  corporate  proceedings  of  those  various  corporations  by 
means  of  which  they  have  become  merged  or  united  in  tho 
existing  corporation  of  the  Boston,  Hartford  and  Erie  Railroad 
Company,  have  been  found  to  be  very  numerous,  not  a  little 
complicated,  and  such  as  to  require  much  patient  research  and 
examination.  But  the  result  to  which  the  Commissioners  have 


12 

come,  upon  a  review  of  all  these  is,  that  the  Boston,  Hartford 
and  Erie  Railroad  Corporation  have  a  charter  and  franchise  for 
a  railroad  from  Boston  to  the  North  River,  as  indicated  upon 
the  map,  by  the  way  of.  Blackstone,  Putnam,  Willimantic, 
Hartford  and  Waterbury  to  Fishkill ;  also  from  Boston  to  New 
Haven  by  the  way  of  Brookline,  Woonsocket,  Putnam,  Willi- 
mantic and  Middletown,  some  portions  of  both  which  lines  are 
over  and  along  the  same  route  or  location.  And  that  the  same 
corporation  have  also  by  the4r  charter  or  franchise  a  railroad 
from  Providence  by  the  way  of  Plainfield  to  Hartford,  and  a  rail- 
road from  Blackstone  to  Southbridge,  all  under  one  ownership, 
management  and  control. 

The  following  schedule  will  show  the  lengths  and  distances 
of  these  various  parts  and  portions  of  the  railroad  existing  and 
contemplated  belonging  to  said  corporation,  and  what  parts  and 
portions  of  those  are  now  in  operation,  and  what  are  con- 
structed or  in  process  of  construction,  but  not  in  use,  and  upon 
what  parts  or  portions  no  work  has  yet  been  done,  which  is  here 
furnished  to  enable  the  Governor  and  Council  to  judge  some- 
what of  the  condition  and  prospective  capacities  of  the  road, 
should  it  be  completed  : — 

Memorandum  of  Distances,  Boston,  Hartford  and  Erie  Railroad. 

From  Boston  to  Mechanicsville,  built,         .         .  59.57  miles. 

From  Mechanicsville  to  Willimantic,  building,     .  26.28     " 

From  Willimantic  to  Waterbury,  in  operation,    .  63.86     " 
From  Waterbury  to  Fishkill,  under  contract,  with 

some  little  work  partially  begun,     .         .         .  76.39     " 


Total, 226.1      " 

The  above  constitutes  the  proposed  through  line  from  Boston 
to  Fishkill,  and  from  this  contemplated  through  line,  there  are 
to  be  the  following  branches : — 

One  from  a  point  twelve  miles  from  Boston,  to  Dedham, 
(incomplete),  two  miles. 

One  from  North  Wrentham,  twenty-three  miles  from  Boston, 
to  Medway,  (incomplete),  four  and  five-tenths  miles. 

One  from  East  Thompson,  fifty-two  miles  from  Boston,  to 
Southbridge,  (in  operation),  seventeen  and  five-tenths  miles. 


13 

The  line  from  Boston  to  East  Thompson,  and  the  branch  to 
Southbridge,  are  at  present  in  operation  as  a  through  line. 

There  is  also  a  line  in  operation  from  Providence  to  Willi- 
mantic,  (fifty-eight  and  one-half  miles,)  forming,  with  the  line 
from  Willimantic  to  Waterbury,  the  through  line  from  Provi- 
dence to  Waterbury,  called  the  Hartford,  Providence  and  Fish- 
kill  Railroad,  and  not  yet  actually  in  possession  of  the  Boston, 
Hartford  and  Erie  Railroad  Company. 

And  finally,  there  is  the  line  in  operation  from  Brookline  to 
Woonsocket,  thirty-three  and  three-fourths  miles  in  length. 

In  going  through  with  the  investigations  above  referred  to, 
the  Commissioners  became  advised  that  there  was  an  indebted- 
ness in  various  forms  outstanding  against  some  or  all  of  these 
various  corporations,  and  they  early  took  measures  to  ascertain 
what  claims  were  thus  outstanding,  not  so  much  with  a  view  of 
passing  upon  the  amount  and  justice  of  individual  claims,  as 
of  approximating  somewhat  the  financial  condition  of  the  pres- 
ent corporation.  To  this  end,  they  caused  advertisements  to 
be  published  in  one  or  more  newspapers  in  New  York,  New 
Haven,  Hartford,  Providence  and  Boston,  requesting  such  as 
had  claims  against  any  of  those  roads,  which  were  not  secured 
by  mortgages  upon  their  franchises,  &c.,  to  state  their  amounts 
to  the  Commissioners.  In  compliance  with  this  request,  claims 
of  various  kinds  and  amounts  have  been  forwarded  to  the  Com- 
missioners, amounting  in  all  to  $69,380,  besides  sundry  indefi- 
nite claims  for  land,  of  which,  however,  the  officers  of  the  cor- 
poration admit  only  a  sum  less  in  amount  than  $5,000  to  be 
due,  and  denying  the  liability  of  £he  company  beyond  that 
sumrand  will,  as  they  say  they  believe,  successfully  contest  the 
same,  if  prosecuted.  This  does  not  include  a  claim  made  for 
certain  alleged  preferred  stock  in  the  Hartford,  Providence  and 
Fishkill  Railroad,  which  is  contested  by  the  Boston,  Hartford 
and  Erie  Company,  and  their  liability  thereon  is  denied. 

The  measures  adopted  by  the  Commissioners  to  ascertain  the 
amount  for  which  any  part  of  the  road  or  its  franchise  was 
liable,  which  was  secured  by  mortgage  or  mortgages  upon  the 
same,  were  these :  They  obtained  from  a  well  known  and 
responsible  counsellor  at  law  in  each  of  the  States  of  New 
York,  Connecticut  and  Rhode  Island,  certificates  of  the  forms 


14 

and  places  required  by  law  for  the  recording  of  railroad  mort- 
gages in  the  respective  States,  and  having  done  so,  they 
obtained  from  the  respective  officers  in  these  States  and  in 
Massachusetts,  certified  statements  of  what  mortgages  have 
been  issued  by  the  said  corporations,  which  had  been  recorded 
therein.  Having  obtained  these,  the  Commissioners,  under  the 
authority  given  them  by  the  Act  of  the  general  court  of  the 
last  winter,  empowering  them  to  take  the  testimony  of  wit- 
nesses in  the  prosecution  of  their  inquiries,  issued  formal  inter- 
rogatories, a  form  of  which  is  hereunto  annexed,  addressed  to 
one  or  more  of  the  trustees,  who  were  supposed  to  hold  and 
have  knowledge  of  any  of  the  mortgages  mentioned  in  any  of 
said  certificates.  By  the  sworn  answers  to  these  interrogatories, 
they  ascertained  that  the  Boston  and  New  York  Central  Rail- 
road Company  issued  upon  one  mortgage  bonds  to  the  amount 

of    .         .        . $794,000  00 

And  the    South   Midland   Railroad   Company, 

upon  another  mortgage,         ....        301,000  00 
That  the  New  York  and  Boston  Railroad  Com- 
pany had  issued  upon  one  mortgage,     .        .       345,600  00 
And  upon  another  mortgage,    .         .     '"*•;  ''      .     1,287,700  00 
The  witness  stated  that  bonds  of  the  Charles 
River  Branch  Railroad  Company  should  be 
added,  of  the  sum  of    ....      '..-•'•      37,00000 
One    of  the  trustees  of  the    Norfolk   County 
Railroad  mortgage  stated  that  in  an  investi- 
gation made  by  the  Supreme  Judicial  Court, 
it  was  found  that  the  amount  of  bonds  then 
outstanding  was    .        .'        .        .;    >i  •    '..'       414,350  00 
The  Hartford,  Providence  and  Fishkill  Railroad 

issued  upon  mortgage,  bonds  to  the  amount  of    2,055,000  00 
To  this  is  to  be  added  arrears  of  interest, .         .        170,000  00 
And  the  Boston,  Hartford  and  Erie  Railroad, 
upon  a  mortgage  made  to  the  Treasurer  of 
Connecticut,  issued  bonds  to  the  amount  of   .     4,500,000  00 


These  make  an  aggregate  of     ....  $9,904,650  00 

This  is  independent  of  bonds  issued  by  the  Boston,  Hartford 
and  Erie  Railroad  Company,  upon  a  mortgage  of  their  entire 


15 

road  and  franchise  to  Berdell  and  others.  This  forms  so  im- 
portant a  part  of  the  means  and  resources  of  the  road,  that  its 
character  and  condition  should  be  more  fully  explained.  The 
mortgage  bears  date  of  March  19th,  1866,  and  is  conditioned 
to  pay  $20,000,000  in  bonds,  payable  in  the  year  1900,  with 
semi-annual  interest  at  seven  per  cent,  in  New  York  or  London, 
as  the  directors  should  authorize,  and  in  the  recital  of  the 
mortgage,  these  bonds  are  said  to  be  issued  for  the  purpose  of 
providing  for  and  retiring  all  existing  mortgage  debts  and  prior 
liens  upon  the  line  of  the  road,  and  for  the  purpose  of  com- 
pleting and  equipping  their  road,  and  of  laying  down  a  third 
rail,  so  as  to  form  an  additional  track  corresponding  with  the 
gauge  of  the  Erie  Railway  of  New  York.  A  copy  of  this 
mortgage  forms  a  part  of  this  Report. 

The  legislature  of  Connecticut  ratified  and  confirmed  the 
making  of  this  mortgage  to  Berdell  and  others  in  May,  1866. 
Rhode  Island  ratified  the  making  of  this  mortgage,  January, 
1866,  and  New  York,  in  April,  1866. 

The  legislature  of  Massachusetts,  in  1865,  (c.  275)  author- 
ized the  Boston,  Hartford  and  Erie  Railroad  Company  to  secure 
any  bonds  it  had  or  might  issue,  by  a  mortgage  upon  its  rail- 
way, franchise,  &c.,  situated  in  Massachusetts,  and  in  1866, 
(c.  142)  confirmed  the  doings  of  the  company  in  the  making 
of  the  mortgage  to  Berdell  and  others,  with  a  view,  as  said  Act 
will  show,  of  these  bonds  being  substituted,  as  far  as  necessary, 
for  the  bonds  then  outstanding  against  the  prior  companies 
which  had  held  the  parts  of  the  road  within  the  State  of 
Massachusetts. 

The  Act  of  1867,  (c.  284)  under  which  these  Commissioners 
were  appointed,  required  that  before  any  scrip  should  be  loaned 
to  the  company,  all  underlying  mortgages  upon  that  part  of 
the  Boston,  Hartford  and  Erie  Railroad  lying  between  the  foot 
of  Summer  Street,  in  the  city  of  Boston,  and  the  town  of 
Southbridge,  in  Massachusetts,  and  Willimantic,  in  Connecti- 
cut, should  be  cancelled  and  discharged  to  less  than  one  million 
of  dollars,  and  a  bond  given  conditioned  that  the  parts  of  said 
railway  above  mentioned  should  be  protected  from  all  such 
uncancelled  bonds. 

The  attention  of  the  Commissioners  was  consequently  called 
to  the  question  how  far  this  requirement  had  been  complied 


16 

with  by  the  company,  and  also  what  amount  of  indebtedness 
of  said  company,  in  bonds  or  otherwise,  was  now  outstanding. 
By  the  affidavit  of  the  Hon.  J.  C.  Bancroft  Davis,  one  of  the 
trustees  in  the  Berdell  mortgage,  it  appears  that  there  had 
been,  on  June  4th,  1868,  thirteen  thousand  bonds,  of  one  thou- 
sand dollars  each,  signed  by  said  trustees,  nine  thousand  three 
hundred  and  thirty-seven  of  which  had  been  delivered  to  the 
Boston,  Hartford  and  Erie  Railroad  Company.. 

The  depositions  of  more  than  one  of  the  trustees  in  the  earlier 
bonds  tended  to  show  that  a  very  considerable  part  of  those 
had  been  surrendered  to  the  Boston,  Hartford  and  Erie  Com- 
pany. Thus,  J.  W.  Clark  states  that  only  $45,000  of  those 
issued  by  the  Boston  and  New  York  Central  are  outstanding, 
the  balance  being  now  in  the  possession  of  the  Boston,  Hartford 
and  Erie  Railroad  Company,  and  ihat  the  entire  amount  issued 
by  the  South  Midland  Railroad  Company  are  in  the  possession 
of  the  Boston,  Hartford  and  Erie  Company. 

Mr.  J.  W.  Converse,  a  trustee  of  the  Norfolk  County  Rail- 
road mortgage,  states  that  nearly  all  the  bonds  issued  upon 
that  mortgage,  and  all  of  which  he  had  obtained  any  informa- 
tion, are  in  the  hands  of  the  trustees,  ready  to  be  delivered  to 
the  Boston,  Hartford  and  Erie  road,  under  a  satisfactory 
arrangement. 

Mr.  H.  N.  Farwell  states  that  all  the  bonds  issued  by  the 
New  York  and  Boston  Railroad,  and  by  the  Charles  River 
Railroad,  except  $65,200,  are  in  the  possession  of  the  Boston, 
Hartford  and  Erie  road ;  and  by  a  statement  of  the  treasurer 
of  the  Boston,  Hartford  and  Erie  road,  which  is  hereto  annexed, 
it  appears  that  the  amount  of  said  bonds  which  had  been  taken 
up  before  the  date  of  the  Berdell  mortgage  was  $1,150,800, 
and  since  that,  $5,963,000,  leaving,  of  the  above  sum  of 
$9,904,650  outstanding,  $2,790,800,  which  includes  also  an 
item  of  interest  outstanding  of  $170,000.  Of  this  amount,  the 
bonds  of  the  Providence,  Hartford  and  Fishkill  Railroad  con- 
stitute $2,055,000,  on  which  the  above  item  of  interest  is  due. 
So  that  a  sum  clearly  less  than  $1,000,000  remains  outstanding 
upon  any  part  of  the  road  between  Boston  and  Willirnantic  or 
Southbridge. 

To  ascertain  what  amount  of  said  bonds  had  been  taken  up, 
and  were  in  possession  of  the  Boston,  Hartford  and  Erie  road, 


William  Dehoi$®l? .aSWjlrfSB^to-  count  and  examine 
them,  and  his  report ?Qj£yj3j$h  examination  is  herewith  returned, 
showing  that  the  aggregate,  as  counted  by  him,  was  $6,672,650, 
including  an  item  of  interest  notes  of  $277,000,  viz. :  — 

"  To  the  Hon.  GEORGE  T.  BIGELOW  : 

"I  hereby  certify  that  I  have  personally  examined  and  counted 
sundry  bonds  and  mortgage  notes  exhibited  to  me  by  the  treas- 
urer of  the  Boston,  Hartford  and  Erie  Railroad  Company,  as 
follows,  viz. : 

"  South  Midland  Railroad  Company  bonds 
amounting  to  three  hundred  and  one  thou- 
sand dollars, $301,000  00 

"Norfolk  County  Railroad  Company  bonds 
amounting  to  four  hundred  and  ten  thou- 
sand seven  hundred  and  fifty  dollars,  .  .  410,750  00 

"  Boston  and  New  York  Central  Railroad  Com- 
pany bonds  amounting  to  seven  hundred 
and  sixty  thousand  dollars, ....  760,000  00 

"  New  York  and  Boston  Railroad  Company 
bonds  amounting  to  eight  hundred  and 
eighty-five  thousand  nine  hundred  dollars,  .  885,900  00 

"  Charles  River  Railroad  Company  bonds 

amounting  to  sixteen  thousand  dollars,  .  *  16,000  00 

"  Boston,  Hartford  and  Erie  Railroad  Company 
bonds  amounting  to  four  millions  and 
twenty-two  thousand  dollars,  .  .  .  4,022,000  00 

"New  York  and  Boston  Railroad  Company 
mortgage  notes  amounting  to  two  hundred 
and  seventy-seven  thousand  dollars,  .  .  277,000  00 

"  Making  in  the  aggregate,  in  bonds  and  notes, 
the  sum  of  six  millions  six  hundred  and 
seventy-two  thousand  six  hundred  and  fifty 
dollars, $6,672,650  00 

"  BOSTON,  July  25, 1868." 

In  either  mode  of  computation,  therefore,  there  appears  to 
be  considerably  less  than  $1,000,000   outstanding  upon  that 
B 


18 

part  of  the  road  mentioned  in  the  Act  under  which  this  Com- 
mission was  created  ;  so  that,  in  that  respect,  the  Boston,  Hart- 
ford and  Erie  Railroad  appear  to  have  complied  with  the  pre- 
liminary conditions  upon  which  a  loan  of  scrip  was  to  be  made 
by  the  Commonwealth. 

In  respect  to  the  other  subjects  upon  which  the  Commis- 
sioners were,  by  said  Act,  expected  to  report,  one  of  them  was, 
how  far.  in  their  judgment,  the  Boston,  Hartford  and  Erie 
Railroad  had  within  their  command  the  means  of  completing  a 
line  of  railway  from  Boston  to  the  North  River  at  Fishkill  ? 

The  treasurer  states  the  present  floating  debt  of  the  com- 
pany to  be  $1,022,988.31,  and  the  interest  notes  given  upon 
exchange  of  the  mortgage  bonds,  $1,127,744.14.  The  old 
issue  of  bonds  outstanding,  including  interest  in  arrears, 
$2,790,800.  And  to  these  are  to  be  added  the  amount  of  the 
Berdell  mortgage  bonds,  sold  or  exchanged,  and  therefore 
outstanding  against  the  company,  of  $10,963,000,  making  an 
aggregate,  independent  of  anything  due  upon  the  first  class  of 
claims  mentioned  in  this  Report,  of  $15,904,532.45. 

Of  the  assets  or  means  at  the  command  of  the  company, 
they  hold,  as  stated  by  the  treasurer,  of  the  Berdell  bonds  not 
yet  negotiated,  the  sum  of  $9,037,000,  fifty  thousand  shares 
of  capital  stock  not  yet  disposed  of,  cash  on  hand  on  deposit  in 
bank,  as  certified  by  the  cashier,  $2,000,000,  and  acceptances 
of  the  Erie  Railroad  for  $1,574,000. 

The  above  may  be  regarded  as  convertible  means  at  the 
market  prices  of  the  bonds  and  stock  of  the  company. 

The  company  has  its  road  and  its  rolling  stock,  including 
the  Hartford,  Providence  and  Fishkill  Railroad,  above  its 
mortgages,  which,  in  the  judgment  of  the  Commissioners,  may 
be  fairly  estimated  at  the  sum  of  at  least  twelve  million  dollars, 
having  reference  to  the  present  cost  of  such  a  road  and 
equipment. 

But  as  these  are  not  a  present  means  of  raising  money, 
they  are  not  taken  into  account  in  judging  of  the  capacity  of 
the  company  to  complete  the  road. 

The  company  having  reduced  the  mortgage  upon  the  part 
of  the  road  mentioned  in  the  Act  to  less  than  $1,000,000,  pro- 
pose to  deposit  with  the  Commonwealth,  at  once,  the  full 
amount  in  the  Berdell  mortgage  bonds  of  $4,000,000,  to  which 


19 

the  State  by  the  Act  would  be  ultimately  entitled  upon  loan- 
ing its  scrip  to  the  contemplated  amount  of  $3,000,000. 

Of  the  importance  of  the  road,  if  completed,  to  the  business 
of  Boston  and  the  State,  it  is  no  part  of  the  duty  of  the  Com- 
missioners to  speak,  except  as  it  bears  upon  the  probability  of 
its  being  ultimately  constructed  and  put  in  use.  This  undoubt- 
edly entered  into  the  consideration  of  the  legislature  in  pro- 
Tiding  for  a  contingent  loan  of  scrip.  A  glance  at  the  map  of 
New  England  and  New  York  must  satisfy  any  one  that  a  road 
extending  from  Boston,  through  the  region  traversed  by  this 
road,  and  connecting  directly  with  one  of  the  great  lines  from 
the  "West,  could  not,  when  once  built,  fail  to  be  the  avenue  of 
an  immense  and  constantly  increasing  trade  and  business. 
The  Commissioners  have  no  better  means  of  forming  a  judgment 
upon  this  point,  however,  than  the  Governor 'and  Council,  nor 
can  it  be  a  present  convertible  means  out  of  which  the  road 
can  be  constructed,  though  it  may  be  an  element  of  credit  upon 
which  the  road  may  hereafter  raise  an  additional  loan,  if  it 
becomes  necessary. 

In  forming  a  judgment  of  the  degree  of  confidence  with 
which  the  Governor  and  Council  may  count  upon  the  comple- 
tion of  the  road  by  the  present  company  within  the  time  pre- 
scribed by  the  Act,  reference  must  be  had,  in  no  small  measure, 
to  the  character  of  its  management,  in  judgment,  fidelity  and 
energy,  and  skill  on  the  part  of  its  officers  and  managers. 

While  the  Commissioners  have  not  gone  into  detail  in  respect 
to  its  present  management,  they  have  become  satisfied  that  the 
enterprise  is  being  carried  forward  with  energy  and  a  confident 
determination  on  the  part  of  the  president  and  directors,  and 
that,  if  these  are  not  suffered  to  be  relaxed,  the  road  may  be 
completed  within  the  time  prescribed  by  the  Act ;  and  should 
there  be  cause  hereafter  to  apprehend  a  failure  to  comply  with 
the  requirement  of  the  Act,  it  will  be  competent  for  the  Gov- 
ernor and  Council,  by  the  terms  of  the  Act,  at  any  time  to 
withhold  further  advances  of  the  loan. 

The  treasurer  states  that  the  present  gross  earnings  of  the 
road  amount  to  the  annual  sum  of  $388,639.07,  and  that  the 
value  of  the  bonds  and  stock  of  the  road  is  rising  in  the  market 
as  the  work  progresses. 


20 

The  Commissioners  have  made  the  best  estimate  in  their 
power  of  the  probable  cost  of  the  road,  as  it  has  been  projected, 
located  and  contracted  for,  including  a  moderate  outlay  for  first 
equipment,  which,  for  obvious  reasons,  it  might  not  be  policy 
to  disclose  in  a  public  report,  as  they  have  meant  to  estimate 
it  sufficiently  high  to  meet  the  contingencies,  and  if  published 
it  might  embarrass  the  company  in  making  their  contracts. 

They,  however,  have  compared  this  estimate  with  the  means 
and  resources  of  the  company,  as  exhibited  above,  and .  they 
have  come  to  the  conclusion  that,  if  honestly  and  judiciously 
used,  and  with  a  reasonable  degree  of  energy,  enterprise  and 
economy,  the  road  may  be  thereby  constructed  and  moderably 
equipped. 

In  conclusion,  the  Commissioners  respectfully  report  that 
they  are  satisfied  ? — First,  That  the  Boston,  Hartford  and  Erie 
Kailroad  Company  have  a  good  title  to  the  franchise  and  rail- 
road as  described  above,  between  Boston  and  Fishkfil  and 
Providence  and  Fishkill.  Second,  That  the  company  have 
removed  all  underlying  mortgage  debt  prior  to  the  Berdell 
mortgage,  upon  that  part  of  the  road  lying  between  Boston  and 
Williamantic  and  Southbridge,  except  a  sum  less  than  $1,000,- 
000,  now  outstanding  thereon.  Third,  That  the  company 
have  the  means,  if  aided  by  a  loan  of  the  scrip  of  the  State,  as 
proposed,  and  if  prudently  and  properly  used  and  managed,  by 
which  to  complete  the  road  to  Fishkill  and  provide  a  moderate 
equipment  therefor ;  and  Fourth,  That  if  prosecuted  with 
reasonable  energy  and  good  faith,  the  company  may  complete 
said  road  within  the  time  prescribed  in  the  Act  providing  for 
said  Commission. 

The  Commissioners  herewith  make  a  recommendation  for  an 
allowance  by  the  Governor  and  Council  of  a  loan  of  scrip  to 
the  Boston,  Hartford  and  Erie,  for  work  already  done  and 
equipment  purchased. 

All  which  is  respectfully  submitted. 

G.  T.  BIGELOW, 
EMORY  WASHBURN, 
S.  ASHBURNER, 

Commissioners.' 
BOSTON,  July  31, 1868. 


21 


Condition   of  Bonded  Indebtedness   under  the   Mortgage  to  Robert  If. 
Berdell  and  Others,  of  date  of  March  16,  1866,  for  $20,000,000. 

Amount  of  bonds  exchanged  for  bonds  issued 
by  Boston  and  New  York  Central  Railroad 
Company  ;  Norfolk  County ;  Southern  Mid- 
land ;  Charles  River  Branch  ;  New  York  and 
Boston  ;  Boston,  Hartford  and  Erie,  March  1,  • 
1864  ;  New  York  and  Boston  mortgage  notes,  $5,963,000  00 

Sold  in  New  York, 5,000,000  00 


$10,963,000  00 
Owned  by  corporation,  and  held  to  take  up  all 

underlying  bonds,  and  for  general  uses  of 

Company, $9,037,000  00 

Floating  debt,  July  20, 1868,  ....  1,022,988  31 
Amount  of  notes  given  for  overdue  interest  on 

exchanged  bonds,  and  due  Sept.  1, 1872,  with 

interest  after  Jan.  1, 1870,  ....      1,127,744  14 

H.  S.  BARRY,  Asst.  Treas. 

I  hereby  certify  that  this  covers  the  whole  outstanding  debts  and  liabilities 
on  account  of  existing  contracts.  H.  S.  BARRY,  Asst.  Treas. 

SUFFOLK,  ss.    July  30,  1868.    Subscribed  and  sworn  to  as  true  before  me, 

G.  T.  BIGELOW,  Commissioner,  $•<;.,  fyc. 


22 


Statement   concerning  Bonded  Indebtedness   on   Franchise  and  Estate 
of  Boston,  Hartford  fy  Erie  Railroad  Company. 

Amount  of  bonds  exchanged    since  mortgage 

to  Berdell  and  others, $5,963,000  00 

Amount  taken  up  before  then,        .        .        .     1,150,800  00 

$7,113,800  00 

Present  bonded  debt  outside  of  Berdell  mort- 
gage,— 

Hartford,  Providence  and  Fishkill,  .  $2,055,000 
Boston  and  New  York  Central,  .  34,000 
Boston,  Hartford  and  Erie,  mortgage 

of  1864, 477,000 

New  York  and  Boston,    .        .        .         54,800 
Amount  of  int'st  on  Hartford,  Prov- 
idence and  Fishkill  bonds,   .        ,       170,000 

2,790,800  00 


$9,904,600  00 

Amount  of  indebtedness  at  issue  of  Berdell  and 

other  mortgages  before  then,  .  .  '  .  $9,904,600  00 

Amount  of  bonded  indebtedness  resting  on  the 
franchise  and  property  between  foot  of  Sum- 
mer Street,  Boston,  and  Southbridge  in  Mass. 
and  Willimantic  in  Conn.,  .  .  .  ":.  511,000  00 

H.  S.  BARRY,  Asst.  Treas. 
BOSTON,  July  25, 1868. 

SUFFOLK,  ss.    July  30, 1868.   Subscribed  and  sworn  to  as  true  before  me, 

G.  T.  BIGELOW,  Commissioner. 


23 


To  His  Excellency  the  Governor  and  the  Honorable  Council 
of  the   Commonwealth  of  Massachusetts: 

The  undersigned,  Commissioners  appointed  under  an  Act  of 
the  legislature  of  said  Commonwealth,  passed  on  the  27th  day 
of  May,  1867,  hereby  certify  that  the  "  Boston,  Hartford  and 
Erie  Railroad  Company"  have  in  their  judgment  expended, 
since  the  passage  of  said  Act,  in  work  upon  new  road  and 
equipment  belonging  to  them,  the  sum  of  two  hundred  thou- 
sand dollars  ;  and  that  this  sum  has  been  properly  expended  in 
the  construction  of  new  road  and  in  the  purchase  of  equipment. 

Dated  at  Boston,  this  31st  day  of  July,  A.  D.  1868. 

G.  T.  BIGELOW, 
EMORY  WASHBURN, 
S.  ASHBURNER, 

Commissioners. 


[B.] 

COMMONWEALTH  OF  MASSACHUSETTS. 

ATTOENEY  GENERAL'S  OFFICE,         ) 
BOSTON,  30  COURT  STREET,  August  21, 1868.  J 

To  His  Excellency  the  Governor : 

SIR  : — I  have  your  letter  asking  me  to  report  fully  in  writing 
to  you,  and  as  early  as  may  well  be,  upon  the  various  matters 
which,  by  the  act  of  1867,  are  to  be  made  to  appear  to  the  satis- 
faction of  the  governor  and  council  and  attorney  general,  before 
granting  the  first  instalment  of  the  state  loan  to  the  Boston, 
Hartford  and  Erie  Railroad  Company ;  and  in  reference  thereto 
I  beg  leave  respectfully  to  submit  the  following  suggestions : 

No  evidence  as  to  these  matters  has  been  laid  before  me  from 
any  source,  except  the  report  of  the  commissioners. 

1.  The  Berdell  mortgage  appears  to  have  been  duly  exe- 
cuted ;  but  it  does  not  appear  that  it  has  been  duly  recorded. 

2.  The  official    return  of  this  company    to   the  Common- 
wealth, published  in  January,  1866,  shows  that  there  were  then 
nine  existing  mortgages  covering  some  portions  of  their  roads. 
The  commissioners'  report,  if  I  understand  it  correctly,  includes 
but  eight.     It  does  not  appear  whether  or  not  any  of  the  mort- 
gages have  been  cancelled  or  discharged  of  record.     Certainly 
some  of  them  have  not  been ;  and  it  therefore  remains  to  be 
shown  that  the  mortgage  debts  secured  by  these  underlying 
mortgages  (and  others,  if  there  are  others,)  have  been  reduced 
to  less  than  81,000,000. 

The  mode  most  satisfactory  to  me  of  showing  this  would  be 
as  follows :  First,  to  ascertain  in  detail  all  the  mortgages  that 
have  ever  been  made,  covering  any  part  of  the  roads ;  the 
amount  of  bonds  issued  under  each  mortgage  and  secured 
thereby ;  whether  any  other  debt  or  obligation  or  duty  involv- 
ing an  expenditure  of  money  is  secured  thereby ;  what  amount 


25 

of  bonds  secured  by  each  mortgage  has  been  taken  up  ;  what 
amount  now  remains  outstanding ;  and  what  amount  of  interest 
is  due  on  such  as  remain  outstanding.  Then,  if  the  -bonds  or 
other  debts  or  duties  secured  by  any  mortgage  have  all  been 
taken  up,  to  have  a  discharge  of  every  such  mortgage  duly 
entered  of  record.  Finally,  if  the  bonds  or  other  debts  secured 
by  any  mortgage  have  been  only  partially  taken  iip,  to  have  a 
discharge  pro  tanto  of  every  such  mortgage  duly  entered  of 
record ;  that  is,  a  discharge  as  to  all  such  bonds  or  debts  as 
have  been  taken  up ;  so  that  the  security  will  only  stand  upon 
record  as  applicable  to  the  outstanding  bonds,  debts  or  other 
duties. 

It  may  be  that  this  course  is  impracticable,  as  to  entering  a 
a  discharge  pro  tanto  of  record.  In  that  case,  it  seems  to  me 
that  the  evidence  should  be  precise,  to  show  the  number  of 
bonds  or  other  debts  that  have  been  taken  up  or  satisfied,  and 
that  the  same  have  been  cancelled. 

At  present,  I  am  unable,  from  any  facts  within  my  knowl- 
edge, to  make  up  such  a  statement  in  detail  as  to  the  number 
of  mortgages  that  have  been  made,  or  the  bonds  or  other  debts 
or  duties  secured  thereby,  or  the  amount  of  bonds  taken  up,  or 
the  precise  amount  still  outstanding  and  secured  by  each  mort- 
gage, or  the  interest  remaining  due  thereon.  It  does  not 
appear  that  any  of  the  bonds  have  been  cancelled  which  have 
been  taken  up. 

3.  The  commissioners  certify  that  they  are  satisfied  that  the 
railroad  company  have  properly  expended  $200,000  in  the  con- 
struction of  new  road  and  purchase  of  equipment,  since  the  act 
of  1867  was  passed.  This  certificate  would  be  entirely  satisfac- 
tory to  me  if  by  the  true  construction  of  the  statute  I  deemed 
myself  at  liberty  to  accept  their  judgment,  without  knowing 
the  facts  upon  which  it  is  founded.  But  in  my  opinion  it  was 
the  intention  of  the  legislature  that  there  should  be  an  inde- 
pendent judgment  of  the  governor  and  council  and  attorney 
general,  founded  upon  a  knowledge  of  the  facts. 

I  have  the  honor  to  be, 
Very  respectfully,  your  obedient  servant, 

CHARLES  ALLEN. 


26 


[C.] 

COMMONWEALTH    OF    MASSACHUSETTS. 

COUNCIL  CHAMBER,  BOSTON,  September,  1868. 

The  Committee  of  the  Council,  to  whom  was  referred  the 
report  of  the  commissioners  appointed  with  reference  to  the 
loan  to  the  Boston,  Hartford  and  Erie  Railroad  Company, 
together  with  the  report  of  the  attorney  general  thereon,  have 
considered  the  same,  and  herewith  submit  their  Report : — 

The  requirements  of  the  Act  of  the  year  1867,  chapter  284, 
to  be  complied  with  on  the  part  of  said  company,  to  entitle 
them  to  the  first  instalment  of  scrip  or  certificates  of  indebted- 
ness, which  compliance  must  be  made  to  appear  to  the  satisfac- 
tion of  the  governor  and  council  and  the  attorney  general, 
as  also,  in  some  particulars,  to  the  commissioners,  are  as 
follows : — 

1.  The  due  execution  of  the  mortgage  to  Berdell  and  others, 
trustees. 

2.  The  proper  registry  of  said  mortgage. 

3.  The  discharge  of  all  underlying  mortgages  upon  the  fran- 
chise and  property  of  said  company,  lying  between  the  foot  of 
Summer  Street,  in  Boston,  and  the  towns  of  Southbridge,  in 
Massachusetts,  and  Willimantic,  in  Connecticut ;  or,  that  the 
mortgage  debt  secured  by  the  underlying  mortgages  on  said 
railroad  between  the  points  aforesaid  has  been  reduced  to  less 
than  one  million  of  dollars ;  and  that  a  bond  of  said  company, 
satisfactory  to  the  governor  and  council,  shall   be  deposited 
with  the  treasurer  of  the  Commonwealth,  conditioned  that  the 
franchise   and  property  of  the  company  between  the  points 
aforesaid  shall  be  protected  from  all  uncancelled  bonds  secured 
by  the  underlying  mortgages  aforesaid. 

4.  That  the  company  has  properly  expended  two  hundred 
thousand  dollars  in  construction  of  new  road  and  in  the  pur- 
chase of  equipment.  • 


27 

5.  An  agreement  of  the  company,  in  form  approved  by  the 
attorney  general,  and  delivered  to  the  treasurer  of  the  Com- 
monwealth, conditioned  that  said  company  shall  comply  with 
the  provisions  of  said  Act,  and  indemnify  and  save  harmless 
the  Commonwealth,  from  all  expenses  incurred,  or  loss  or  dam- 
age on  account  of  said  scrip,  and  that  said  company  shall  and 
will  well  and  truly  pay  the  principal  and  interest  of  said  scrip 
when  the  same  shall  become  due  and  payable,  and  deliver  as 
security   for  the   performance  of  the  conditions  of  said  agree- 
ment $133,333.33^,  in  the  bonds  secured  by  the  said  Berdell 
mortgage,  to  and  for  every  one  hundred  thousand  dollars  in 
scrip  to  be  issued  to  the  company. 

6.  No  scrip  to  be  issued  unless  it  shall  be  made  to  appear,  to 
the  satisfaction  of  the  governor  and  council  and  commissioners, 
that  the  company  will  be  able,  either  alone  or  with  the  aid  of 
other  parties  than  this  Commonwealth,  to  complete  a  line  of 
railway  from  Boston  to  Fishkill,  within  five  years  from  the 
passage  of  the  Act. 

The  Committee  proceed  to  consider  said  requirements,  in  the 
order  named,  and  to  inquire  as  to  the  performance  of  these 
conditions  on  the  part  of  the  company,  and  their  probable 
ability  to  complete  the  work. 

1.  It  appears  by  the  reports,  both  of  the  commissioners  and 
the  attorney  general,  that  the  Berdell  mortgage  has  been  duly 
executed. 

2.  We  find,  by  a  certificate  made  to  us  by  the  chairman  of  the 
commissioners,   that  said    Berdell    mortgage  has  been   duly 
recorded. 

3.  We  find  it  impracticable  to  require  the  cancellation  and 
discharge  of  record  of  the  underlying  mortgages,  inasmuch  as 
there  appears  on  all  of  them,  with  a  single  exception,  to  wit, 
that  made  by  the  South  Midland  Railroad  Company,  to  be  more 
or  less  outstanding  bonds,  as  will  more  fully  appear  herein- 
after.    We  therefore  proceed  to  consider  the  alternative  pro- 
vision of  the  statute. 

And,  first,  as  to  the  outstanding  bonds  secured  by  the  under* 
lying  mortgages  ;  and  here  the  Committee  seem  to  be  compelled, 
in  a  great  measure,  to  rely  upon  the  report  of  the  commis- 
sioners, who  appear  to  have  proceeded  in  the  only  practicable 


28 

mode  to  ascertain  the  facts,  viz. :  by  obtaining  certificates  or 
depositions  from  the  proper  officers  in  the  several  registries  of 
deeds  and  other  places,  in  the  several  States  where  the  property 
of  the  company  is  situated,  stating  the  number  and  terms  of 
all  mortgages  made  by  the  respective  corporations  which  have 
been  united  with  and  merged  into  the  Boston,  Hartford  and 
Erie  Railroad  Company,  and  by  the  sworn  statements  of  one  or 
more  of  the  trustees  named  in  the  respective  mortgages,  and 
also  the  sworn  statements  of  the  treasurer  of  said  company. 

From  these  sources  it  appears  that  the  mortgages  and  the 
bonds  issued  under  the  same  upon  the  security  of  the  road  from 
Boston  to  Fishkill,  and  exclusive  of  those  issued  by  the  Hart- 
ford, Providence  and  Fishkill  Company,  are  as  follows  : — 

Boston  and  New  York  Central  Railroad  Co.,  .  8794,000  00 

South  Midland  Railroad  Co.,  ....  301,000  00 
New  York  and  Boston  Railroad  Co.,  upon  one 

mortgage, 345,600  00 

New  York  and  Boston  Railroad  Co.,  upon 

another  mortgage,  .  .'  .  .  1,287,70000 

Charles  River  Railroad  Co.,  .  (  %jf  .  .  37,000  00 

Norfolk  County  Railroad  Company,  .  .  .  414,350  00 

Boston,  Hartford  and  Erie  Railroad  Co.,  1864,  4,500.000  00 


Total,      .        .  •       .        .      ";."      .        .    $7,679,650  00 

This  is  the  amount  of  bonds  issued  upon  what  are  called  the 
underlying  mortgages,  and  is  exclusive  of  the  indebtedness  of 
the  Providence,  Hartford  and  Fishkill  Railroad  Company, 
which  is  not  included  in  the  direct  line  from  Boston  to  Fishkill. 
The  attorney  general,  in  his  report,  calls  attention  to  the  report 
of  the  company  made  to  the  State  in  1866,  in  which  the 
number  of  mortgages  is  stated  to  be  nine,  and  that  the  com- 
missioners speak  only  of  eight.  This  is  explained  by  the  fact 
that  there  were  two  mortgages  made  by  the  Hartford,  Provi- 
dence and  Fishkill  Company,  both  together  amounting  to 
$2,055,000,  as  stated  by  the  commissioners,  though  treated  by 
them  as  one  mortgage. 

There  is  a  discrepancy  of  a  few  thousand  dollars  between  the 
amount  of  issued  bonds,  as  stated  by  the  commissioners,  and 
the  statement  of  the  treasurer  of  the  company.  This  difference 


29 

is  explained  by  the  commissioners  thus :  "When  they  found 
variations  in  the  testimony  of  the  witnesses  as  to  the  amount  of 
bonds  issued,  which  did  occur  in  a  single  instance,  they,  by 
way  of  precaution,  adopted  the  larger  sum  or  amount. 

Of  these  bonds,  it  appears  by  the  statement  of  William 
Dehon,  Esq.,  who  was  employed  by  the  commissioners  to  count 
the  same,  that  the  following  bonds  have  been  taken  up  by  the 
Boston,  Hartford  and  Erie  Railroad  Company,  and  are  now 
held  by  them  ready  to  be  cancelled,  viz. : — 

South  Midland  Railroad  Co.,  bonds,         .  .  $301,000  00 

Norfolk  County  Railroad  bonds,       .        .  .  410,750  00 

Boston  and  New  York  Central  bonds,       .  .  760,000  00 

New  York  and  Boston  Railroad  Co.  bonds,  .  885,900  00 

do.                        do.           notes,  .  277,000  00 

Charles  River  Railroad  Co.  bonds,   .         .  .  16,000  00 

Boston,  Hartford  and  Erie  Railroad  Co.  notes,  4,022,000  00 


Total, $6,672,650  00 

In  addition  to  the  bonds  and  notes  counted  by  Mr.  Dehon,  it 
appears,  by  the  sworn  statement  of  Mr.  Barry,  assistant  treas- 
urer, furnished  to  the  Committee,  and  also  by  the  evidence  of 
Mr.  Farwcll,  one  of  the  directors  of  the  company,  that  $426,- 
100  of  the  bonds  of  the  New  York  and  Boston  Railroad  Com- 
pany were  never  actually  disposed  of  by  the  company,  and  are 
now  in  the  custody  of  its  treasurer,  but  were  not  counted  by 
Mr.  Dehon,  though  they  were  included  by  the  commissioners  as 
a  part  of  the  mortgaged  indebtedness  of  the  company.  It 
appears,  therefore,  that  these  bonds  should  have  been  counted 
by  Mr.  Dehon. 

It  further  appears  that  since  the  count  by  Mr.  Dehon  the 
company  has  retired  the  additional  amount  of  $47,900  of  the 
outstanding  bonds.  Add  these  amounts  to  the  bonds  counted 
by  Mr.  Dehon  and  we  have  an  aggregate  of  $7,146,650,  thus 
leaving  outstanding  at  this  date  bonds  to  the  amount  of  only 
$538,000.  The  company  believe  the  amount  to  be  considerably 
less.  The  committee  are  satisfied  from  the  evidence  that  the 
company  has  reduced  the  said  indebtedness  to  less  than 
$1,000,000. 


30 

The  question  of  the  bond  to  be  given  by  the  company  next 
claims  our  attention.  The  second  section  of  the  statute  pro- 
vides that  in  the  event  that  the  underlying  mortgages  are  not 
cancelled  and  discharged,  a  bond  of  the  company,  satisfactory 
to  the  governor  and  council,  conditioned  that  the  franchise  and 
property  of  the  company,  named  and  described  in  the  Berdell 
mortgage,  lying  between  certain  points  named  in  the  Act,  shall 
be  protected  from  all  such  uncancelled  bonds.  What  bond 
ought  the  governor  and  council  to  require  ?  The  Committee 
are  of  opinion  that  a  bond  with  sufficient  sureties,  satisfactory  to 
the  governor  and  council,  in  form  such  as  the  attorney  general 
shall  approve,  in  the  penal  sum  of  one  million  dollars,  should 
be  made  and  executed  by  the  company  and  deposited  with  the 
treasurer  of  the  Commonwealth. 

Before  the  issue  of  any  scrip  by  the  Commonwealth  the  bonds 
and  notes  aforesaid  should  be  counted  and  cancelled,  or  other- 
wise stamped  in  such  manner,  satisfactory  to  the  attorney 
general,  as  shall  clearly  indicate  that  they,  are  not  further  ne- 
gotiable, and  certificates  thereof  made  by  the  commissioners  or 
under  their  direction,  furnished  to  and  deposited  with  the  treas- 
urer of  the  Commonwealth. 

4.  We  are  abundantly  satisfied  by  the  evidence  produced 
before  us  that  the  company  has  properly  expended  two  hundred 
thousand  dollars  in  the  construction  of  new  road  and  in  the 
purchase  of  equipment,  since  the  date  of  the  passage  of  the 
Act. 

5.  It  is  unnecessary  for  the  Committee  to  repeat  the  require- 
ments under  the  fifth  head,  as  they  relate  solely  to  acts  here- 
after to  be  performed  to  entitle  the  company  to  receive  the 
scrip. 

6.  Will  the  company  be  able,  either  alone  or  with  the  aid 
of  other  parties  than  this  Commonwealth,  to  complete  a  line  of 
railway  from  Boston  to  Fishkill  within  five  years  from  the  pas- 
sage of  the  Act  ?     Of  the  226  miles  from  Boston  to  Fishkill, 
there  are  now  in  operation  123.43  miles.     The  parts  not  in 
operation  consist,  first,  of  the  line  from  Mechanicsville  to  Willi- 
mantic,  26.28  miles.     This  portion  is  under  contract  with  a 
responsible  party,  and  the  work,  we  understand,  is  progressing 
satisfactorily,  and  will  probably  be  completed  in  October,  1869. 
Second,  the  line  from  Waterbury  to  Fishkill,  7.6.39  miles.  This 


31 

line  is  also  under  contract,  and  work  thereon  has  been  com- 
menced. Mr.  Ashburuer  expresses  to  the  Committee  his  confi- 
dent opinion  that  the  time  allowed  by  law  for  the  completion  of 
the  road  to  Fishkill  is  ample.  From  the  careful  estimate  made 
up  in  detail  by  Mr.  Ashburner,  and  furnished  to  the  Committee, 
we  find  that  the  unfinished  sections  of  the  road  can  be  com- 
pleted, with  a  moderate  equipment,  at  a  cost  not  to  exceed 
18,850,000.  Of  this  sum,  something  more  than  $500,000  has 
already  been  paid  by  the  company  ;  so  that  the  sum  required 
for  the  completion  of  the  line  may  be  stated,  as  an  outside  esti- 
mate, at  the  sum  of  $8,350,000. 

The  floating  debt  of  the  company  is  stated  to  be,  exclusive 
of  certain  disputed  claims,  mentioned  in  the  commissioners' 
report,  $1,022,988.31,  and  interest  notes  given  in  exchange  of 
mortgage  bonds,  $1,127,744.14,  which  are  payable  in  1872 
without  interest. 

The  available  means  of  the  company,  upon  which  they  rely 
to  enable  them  to  complete  their  road,  may  be  stated  briefly 
thus  : — 

Cash  in  bank,  ....  .  $2,000,000  00 

Acceptances  of  Erie  Eailroad  Company,.  .  1,574,000  00 
Berdell  mortgage  bonds,  after  deducting 

$4,000,000  for  deposit  with  the  State,  and 

$533,000  for  the  redemption  of  outstanding 

bonds,  estimated  at  80  per  cent,  .  .  3,632,000  00 
50,0000  shares  of  capital  stock,  at  $20,  .  .  1,000,000  00 
If,  to  these  amounts,  we  add  the  State  loan, 

which,  if  granted;  will  be   available  from 

time  to  time  as  the  work  progresses,    .        .       3,000,000  00 


We  have, $11,206,000  00 

In  addition  to  this,  the  company  has  its  road  and  rolling- 
stock,  including  the  Hartford,  Providence  and  Fishkill  Railroad, 
above  its  mortgages,  the  value  of  which  the  commissioners 
estimate  at  not  less  than  twelve  millions  of  dollars. 

With  these  means,  present  and  prospective,  at  the  disposal  of 
the  company,  without  further  statement  of  details,  the  Com- 
mittee cannot  reasonably  doubt  their  ability  and  determination 


32 

to  complete  a  line  of  railway  from  Boston  to  Fishkill  within  the 
time  limited  by  the  Act  of  the  legislature. 

The  apparent  interest  of  the  company,  also,  to  secure  a 
speedy  completion  of  the  road,  to  enable  their  stock  and  bond- 
holders to  reap  the  benefit  of  their  investments,  must  form  a 
powerful  inducement  to  its  officers  to  bend  all  their  energies  to 
the  successful  completion  of  the  work. 

The  Committee,  therefore,  recommend  the  issue  of  the  first 
instalment  of  one  hundred  thousand  dollars  to  the  Boston, 
Hartford  and  Erie  Railroad  Company,  upon  the  performance  of 
the  further  conditions  required  by  the  aforesaid  Act,  in  the 
manner  herein  before  indicated. 

THOS.  TALBOT. 
CHAS.  ENDICOTT. 
PETER  HARVEY. 
H.  G.  KNIGHT. 
R.  G.  USHER. 


33 


[D.] 

COMMONWEALTH    OF    MASSACHUSETTS. 

EXECUTIVE  DEPART? 
BOSTON^  September  12 


EXECUTIVE  DEPARTMENT,      ) 
,  1868.  } 


To  the  Honorable  Messrs.  GEORGE  T.  BIGELOW  and  EMORY 
WASHBURN,  and  SAMUEL  ASHBURNER,  Esquire,  Commission- 
ers, &{c.,  Sf-c.  : 

GENTLEMEN  : — Your  report  upon  the  matters  involved  in  the 
question  of  granting  the  loan  of  three  million  dollars  to  the 
Boston,  Hartford  and  Erie  Railroad  Company  was  referred  by 
me  on  its  receipt  to  a  committee  of  the  Council.  This  com- 
mittee has  prosecuted  further  inquiries  upon  the  whole  subject, 
and  has  now  submitted  its  report. 

Their  original  report  is  herewith  forwarded  to  you  for  your 
perusal,  and  as  I  do  not  wish  to  delay  this  question  by  making 
a  copy  I  will  thank  you  to  return  the  same  to  me,  together 
with  the  communication  of  the  Attorney  General  which  is  also 
herewith  transmitted  to  you. 

In  endeavoring  to  satisfy  myself  whether  the  Boston,  Hart- 
ford and  Erie  Railroad  Company  will  be  able,  either  alone,  or 
with  the  aid  of  other  parties  than  the  Commonwealth  of  Massa- 
chusetts, to  complete  a  line  of  railway  from  Boston  to  Fishkill 
within  five  years  from  the  date  of  the  passage  of  the  Act  of  the 
legislature  (May  27,  1867,)  I  desire  to  avail  myself  of  the  pro- 
vision of  the  sixth  section  of  the  Act,  and  ask  from  you  advice 
and  information  somewhat  more  in  detail  than  heretofore  given, 
in  respect  to  the  disbursements  necessary  to  be  made  by  the 
company,  and  their  resources. 

From  the  statement  of  Mr.  Ashburner  to  the  committee  of 
the  council,  it  appears  that  his  estimate  of  the  sum  to  be  allowed 
for  the  completion  of  the  line  of  railway,  with  a  moderate  equip- 
ment, is  .  ;.  '."  ;:'^'"  V"  .  .  18,850,00000 

5 


34 

To  this  sum  it  would  appear  that  the  following 
sums  should  be  added,  as  existing  debts  of  the 
company,  irrespective  of  the  Berdell  bonds,  and 
the  other  outstanding  bonds : — 

Floating  debt, $1,022,988  00 

Interest  notes,        i.   irf^u     ....      1,127,74400 
Certain  other  debts,  in  round  numbers,  .         .  75,000  00 


$11,075,732  00 

In  order  to  ascertain  whether  the  above  sum  of  $11,075,732 
correctly  represents  the  approximate  aggregate  sum  that  the 
company  will  be  called  upon  to  meet,  as  liabilities,  before  the 
probable  completion  of  their  line  of  railway,  will  you  inform 
me : 

1.  Whether  for  any   reason   now   existing  any   deduction 
should  be  made  from  the  above  named  sum  ? 

2.  Whether  the  commissioners  have  so  far  investigated  the 
other  claims,  referred  to  in  their  report,  which  have  been  pre- 
sented or  are  held  against  the  company,  described  as  "  sundry 
indefinite  claims  for  land "  and  "  a  claim  made  for  certain 
alleged  preferred  stock  in  the  Hartford,  Providence  and  Fish- 
kill  Railroad  "  as  to  be  satisfied  that  they  are  in  law  invalid, 
and  that  the  company  will  not  have  to  pay  out  any  considerable 
sum  in  contesting  or  compromising  the  same  ;  and  the  approx- 
imate amount  of  these  claims,  as  made  against  the  company  ? 

3.  Whether  the  relations  existing  between  the  Boston,  Hart- 
ford  and   Erie  Railroad  Company,  and  the  Hartford,  Provi- 
dence and  Fishkill  Company,  will  involve  the  payment  of  any 
sum  by  the  former  company,  except  the  bonds  secured  by  mort- 
gage upon  the  road  of  the  latter  company,  amounting,  for  prin- 
cipal, to  $2,055,000,  and  for  interest  to  $170,000  ? 

4.  Whether  under  any  existing   contracts,  or  in  order  to 
carry  out  any  other  work  or  plan   now  projected,  not  em- 
braced in  the  completion  of  the  direct  line  from  Boston  to 
Fishkill,  the  Boston,  Hartford  and  Erie  Railroad  Company  will 
be  called  on  to  pay  out  any  sums  of  money  ?  as,  for  instance, 
in  prosecuting  work  upon  a  railroad  to  New  Haven,  or  upon 
any  other  branch  road  ? 

5.  Whether  or  not  additions  should  be  made  to  the  other 
sums  above  referred  to,  for  interest  money,  and  if  so,  how 


35 

much  ?  Is  it  the  case  that  upon  the  Berdell  bonds  already 
given  out,  interest  is  now  running  upon  $5,000,000,  and  that 
interest  will  be  due  upon  the  remaining  85,963,000  in  July, 
1870,  and  semi-annually  thereafter ;  that  interest  will  be  due 
upon  the  interest  notes  given  upon  the  exchange  of  bonds,  to 
the  amount  of  $1,127,744,  on  January  1st,  1870,  and  regularly 
thereafter  ;  and  that  interest  is  now  running  upon  the  floating 
debt  of  $1,022,988  ?  Should  not  interest  be  added  for  the 
amount  of  bonds  which  may  be  issued  by  the  State  ?  And  are 
there  any  other  items  which  ought  to  be  taken  into  account  in 
this  connection,  and  what  sum,  in  all,  would  it  be  proper  to 
include,  as  probably  necessary  to  be  paid  for  interest,  before 
the  completion  of  the  work  ?  Has  any  portion  of  the  Berdell 
bonds  been  issued  in  sterling  currency,  and  if  so  how  much, 
and  is  the  interest  thereon  payable  in  coin  ? 

6.  Is  it  probable  that  the  remaining  original  bonds  now  out- 
standing and  secured  by  mortgage  can  be  exchanged  for  Berdell 
bonds  ? 

The  resources  of  the  company,  which  are  relied  upon  to 
enable  them  to  complete  the  railroad,  so  far  as  made  known  to 
me,  appear  to  be  the  following  : — 

Cash,  and  acceptances  of  the  Erie  R.  R.,         .    $3,574,000  00 

Amount  expected  from  the  State,    .        .        .      3,000,000  00 

Berdell  bonds  remaining  after  all  necessary 
appropriations  of  them,  .... 

50,000  shares  of  stock  of  the  company  yet 
unissued,  ....... 

Add  amount  already  paid  towards  the  construc- 
tion of  the  work,  as  appears  by  the  report  of 
Mr.  Ashburner  to  the  committee  of  the 
council,  and  which,  therefore,  should  be 
deducted  from  his  estimate  of  $8,850,000,  .  500,000  00 

In  reference  to  the  resources  of  the  company,  will  you 
inform  me — 

I.  Whether  any  items  which  can  be  reckoned  in  money, 
other  than  those  above  named,  should,  in  your  opinion,  be 
taken  into  the  account  in  estimating  their  ability  to  complete 
the  work  ;  and,  if  so,  what  they  are  ? 


36 

2.  Whether  the  cash,  stated  at  $2,000,000,  is  now  actually 
on  hand,  and  at  the  present  absolute  disposal  of  the  company ; 
and  whether  the  acceptances,  stated  at  $1,574,000,  are  absolute, 
or  dependent  upon  any  condition  ;  and  whether  there  is  any- 
thing to  prevent  the  money  from  being  realized  on  them  at 
once  ?     I  think  it  my  duty  to  require  the  best  evidence  upon 
these  points.     I  desire  that   the   commissioners   should  have 
personal  inspection  of  the  acceptances,  and  give  me  their  opinion 
whether  payment  of  them  can  be  enforced  under  the  laws  of 
New  York. 

3.  What  amount  of  the  Berdell   bonds  will   the  company 
have  available  to  be  disposed  of  after  making  all  necessary 
appropriations,  of  them  ?     At  present,  they  appear  to  have  sold 
or  exchanged,        V     V'     .        .        .        .$10,963,00000 

This  leaves  a  balance  of, .     '»»«•     .        .        .    $9,037,00000 
There  are  required  for  the  State,     .        .        .      4,000,000  00 


Balance,   .        ,, ..    ....  i(     .  $5,037,000  00 

There  appears  to  be  a  balance  of  other  mortgage  bonds  now 
outstanding  of  $2,790,800,  including  those  of  the  Providence, 
Hartford  and  Fishkill  Railroad.  Will  not  Berdell  bonds  to 
this  amount  be  required  under  the  terms  of  the  mortgage,  to 
be  exchanged  for  all  those  other  outstanding  bonds  ?  Or,  if 
not  so  exchanged,  should  not  the  amount  of  those  outstanding 
bonds  be  added  to  the  liabilities  of  the  company  ? 

4.  Whether,  in  your  opinion,  it  is  safe  to  assume  that  the 
balance  of  the  bonds  and  the  50,000  shares  of  stock  can  and 
will  be  disposed  of  by  the  company  at   the  present  market 
rates  ? 

5.  I  will  also  thank  you  to  mention  any  other  consideration 
that  may  occur  to  you  as  bearing  upon  the  question,  whether  or 
not  the  resources  of  the  company  are  sufficient  to  enable  them 
to  meet  the  disbursements  required  for  the  completion  of  the 
railroad  as  contemplated  by  the  statute. 

I  remain,  with  great  respect, 

Your  obedient  servant, 

ALEX.  H.  BULLOCK, 

Governor. 


37 


BOSTON,  September  21, 1868. 
His  Excellency  A.  H.  BULLOCK,  Governor,  Sfc.  : 

DEAR  SIR  : — The  undersigned,  Commissioners,  &c.,  have  the 
honor  to  acknowledge  the  receipt  of  your  Excellency's  com- 
munication of  the  12th  instant,  and  hasten  to  reply  to  the 
several  inquiries  thereby  propounded  to  them. 

In  doing  so,  they  return,  as  desired,  your  Excellency's  com- 
munication, together  with  the  report  of  a  committee  of  the 
council,  and  the  opinion  of  the  attbrney  general  upon  the  sub- 
ject of  a  loan  to  the  Boston,  Hartford  and  Erie  Railroad 
Company. 

To  your  Excellency's  first  and  second  inquiry,  they  answer, — 

1.  That  from  the  floating  debt,  $1,022,988,  there  should  be 
deducted  $418,553.46,  the  same   having  been  paid  since  their 
former  report,  by  applying  a  part  of  th    $2,000,000  then  on 
deposit  for  that  purpose,  as  per  annexed  certificate  of  Mr.  Barry. 

2.  That  the  item  of  interest  notes,  $1,127,744,  has  no  con- 
nection with  the  present  ability  of  the  company  to  complete 
said  road,  because  they  do  not,  in  the  judgment  of  the  commis- 
sioners, form  any  lien  on  the  same.     They  do  not  carry  inter- 
est until  January  1,  1870,  and  are  not  due  and  payable  until 
September  1,  1872,  which  is  subsequent  to  the  time  when,  by 
the  Act,  the  road  is  to  be  completed  to  the  Hudson  River. 

3.  In  respect   to   the   item   of  $75,000  for  "  certain   other 
debts,  <fec.,"  the  Commissioners  have  submitted  the  same  to  the 
inspection  of  Thomas  E.  Graves,  the  legal  counsel  and  adviser 
of  said  company,  and  required   of  him  to   state,  upon   oath, 
what  parts  of  said  claims  are,  in  his  judgment  and  belief,  due 
and  collectable  against  the  company.     He  has  done  so,  and  his 
closing  statement  is  in  these  words  :  "  These  include  all  claims 
presented  the  honorable  commissioners,  and  by  them  handed  to 
me.     My  judgment  and  belief  is,  that  there  is  not  over  six 
thousand  dollars  of  the  whole  claims  can  or  will  ever  be  col- 


38 

lected  out  of  the  Boston,  Hartford  and  Erie  Railroad  Com- 
pany, or  from  any  estate  in  its  possession." 

The  Commissioners  have  no  other  means  of  forming  an  opin- 
ion of  the  amount  due  and  collectible  of  said  supposed  claims. 
Nor  are  they  advised  whether  this  indebtedness  would  affect 
the  ability  of  the  company  to  complete  their  road  any  other- 
wise than  the  fact  of  owing  that  amount  of  money  would  be 
likely  to  do. 

In  reply  to  your  Excellency's  third  inquiry,  the  Commis- 
sioners would  state  that  they  applied  to  Messrs.  George  M. 
Bartholomew  and  Calvin  Day,  who,  they  are  advised,  hold  the 
Hartford,  Providence  and  Fishkill  Railroad  as  trustees  under 
mortgages  thereon,  and  are  informed  by  them,  by  letter  bear- 
ing date  September  18,  1868,  as  follows :  "  There  are  not, 
within  my  knowledge,  any  obligations  of  the  first  named  com- 
pany, (Boston,  Hartford  and  Erie  Railroad  Company,)  except 
such  as  are  recorded  in  the  contract  between  the  two  com- 
panies, dated  August  28, 1863,  and  such  as  would  follow  the 
purchase  of  any  property,  i.  e.,  that  it  is  liable  for  the  exist- 
ing mortgage.  I  refer  to  the  $2,055,000  Hartford,  Providence 
and  Fishkill  Railroad  bonds."  From  this,  and  a  similar  oral 
statement  made  by  one  or  more  of  the  officers  of  the  Boston, 
Hartford  and  Erie  Railroad  Company,  the  Commissioners  are  of 
opinion  that  the  relations  existing  between  the  Boston,  Hart- 
ford and  Erie  Railroad  Company  and  the  Hartford,  Providence 
and  Fishkill  Railroad  Company,  will  not  involve  the  payment 
of  any  sum  by  the  former  company  except  the  bonds  and 
interest  referred  to  in  said  inquiry. 

We  have  ascertained  by  inquiry  from  the  trustees  aforesaid, 
that  all  liabilities  under  the  contract  above  named  are  secured 
by  stock  placed  in  the  hands  of  said  trustees,  in  pursuance  of 
the  provisions  of  the  contract  above  named. 

To  the  fourth  inquiry  of  your  Excellency,  the  Commissioners 
state  that  they  have  inquired  if  any  contracts,  such  as  are 
referred  to  in  said  inquiry,  are  in  existence,  under  which  the 
Boston,  Hartford  and  Erie  Railroad  Company  will  be  called 
upon  to  pay  out  any  sums  of  money,  and  are  satisfied  that 
none  such  exist  upon  which  said  company  are  legally  liable,  or 
which  can  be  enforced  against  them  before  they  shall  have 
completed  their  road  to  Fishkill.  They  have,  among  other 


39 

things,  referred  to  a  contract  between  the  New  York  and  Bos- 
ton Railroad  Company  and  the  Boston,  Hartford  and  Erie  Rail- 
road Company,  dated  December  16,  1864,  in  reference  to  a 
railroad  to  New  Haven,  which,  as  it  seems  to  the  Commis- 
sioners, in  effect  refers  the  ultimate  construction  of  said  road 
to  the  voluntary  action  of  the  Boston,  Hartford  and  Erie 
Railroad  Company. 

To  your  Excellency's  fifth  interrogatory,  the  Commissioners 
state  that  they  called  upon  Mr.  Barry,  the  assistant-treasurer 
of  the  Boston,  Hartford  and  Erie  Railroad,  to  answer  upon 
oath  as  to  the  facts  inquired  of  therein.  In  answer  thereto,  he 
stated  "  that  the  company  has  sold  five  millions  of  dollars  of 
bonds  under  the  Berdell  mortgage,  on  which  interest  will  fall 
due  January,  1869,  and  paid  out  ninety  thousand  of  said 
bonds  on  account  of  bonds  purchased,  on  which  also  interest 
will  fall  due  in  January,  1869.  No  other  of  said  bonds,  with 
coupons  attached,  and  due  before  July,  1870,  are  sold  or  issued." 
He  then  states  that  the  floating  debt  had  been  reduced,  as  is 
above  stated,  and  adds  :  "  On  this  last  amount  ($609,190.54,) 
interest  is  payable  at  various  times  on  the  items  of  the  amount, 
but  in  most  cases  payable  as  the  sums  making  the  amount  fall 
due.  The  notes  given  for  interest  on  exchange  of  bonds  fall 
due  1872,  and  interest  on  them,  July,  18TO,  that  being  six 
months'  interest  from  January,  1870.  There  is  no  interest 
due  on  any  bond  debts  of  the  company,  so  far  as  I  know  or 
believe,  except  what  is  overdue  on  the  bonds  which  have  not 
been  taken  up  or  exchanged,  the  principal  sum  being  about 
$450,000,  and  interest  overdue  about  $50,000,  which  amount 
it  is  expected  will  be  arranged  by  exchange  of  bonds." 

The  Commissioners  have  no  reason  to  doubt  the  correctness 
of  the  above  statement,  and  give  it  as  the  answer  to  said 
inquiry  in  respect  to  interest.  Both  the  assistant  treasurer, 
Mr.  Barry,  and  J.  C.  Bancroft  Davis,  one  of  the  trustees  in  the 
Berdell  mortgage  bonds,  state,  in  writing  to  the  Commissioners, 
that  none  of  said  bonds  have  been  issued  in  sterling  currency, 
and  such  the  Commissioners  believe  to  be  the  case. 

To  the  sixth  interrogatory  of  your  Excellency,  the  Commis- 
sioners say  that  if  the  proposed  loan  should  be  made  by  the 
Commonwealth  to  the  Boston,  Hartford  and  Erie  Railroad 


40 

Company,  they  have  no  doubt  whatever  that  the  remaining 
original  bonds  can  be  exchanged  for  Berdell  bonds.  More 
than  sixty  thousand  dollars  of  such  bonds  have  been  taken  up 
and  exchanged  since  Mr.  Dehon  counted  the  bonds  of  the  com- 
pany, which,  by  his  certificate,  was  July  25,  1868,  and  if  this  is 
done  the  interest  upon  these  now  outstanding  bonds,  as  the 
Commissioners  understand,  will  be  suspended  and  postponed  to 
1870  and  1890,  to  swell  the  item  of  "  interest  notes." 

In  reply  to  your  Excellency's  first  inquiry  on  page  9  of  your 
communication  to  the  Commissioners,  they  would  state  that  it 
appears  by  the  deposition  of  G.  M.  Bartholomew,  that  there 
was  in  the  hands  of  the  treasurer  of  the  City  of  Hartford, 
January  1,  1868,  the  sum  of  §109,835.22,  belonging  to  the 
Hartford,  Providence  and  Fishkill  road,  and  held  in  trust  as  a 
sinking  fund  to  be  applied  in  payment  of  the  mortgage  bonds 
outstanding  against  said  road.  And  that  another  sum  for  the 
same  purpose  was  in  the  hands  of  the  treasurer  of  the  City  of 
Providence,  reported  to  be  in  May,  1866,  $71,888.40. 

By  a  printed  and  published  statement  made  by  the  Hartford, 
Providence  and  Fishkill  Railroad  Company,  purporting  to  bear 
date  March  16,  1868,  these  sinking  funds  are  stated  to  be 
$109,835.22  and  $83,619.18.  These  two  sums,  $193,454.40, 
should  be  taken  as  cash  assets  of  the  company  so  far  at  least  as 
to  be  offset  against  the  item  of  interest  due  on  the  mortgage 
bonds  of  $2,055,500,  stated  as  being  $170,000,  in  your  Excel- 
lency's third  inquiry  above  replied  to. 

To  the  second  interrogatory  of  your  Excellency,  so  far  as  it 
relates  to  the  certificate  of  deposit  for  $2,000,000,  the  Commis- 
sioners are  entirely  satisfied  that  when  their  former  Report  was 
made  that  sum  was  bonafide  on  deposit  belonging  to  said  com- 
pany. They  are  satisfied  further  that  since  that  time  a  part  of 
the  sum  has  been  used  or  loaned  on  interest,  with  satisfactory 
security,  and  that  the  annexed  statement  of  Mr.  Barry,  as  to  its 
condition  and  disposal,  is  true. 

So  far  as  said  interrogatory  relates  to  the  acceptances  of  the 
Erie  Railroad  for  "  $1,570,400,"  the  Commissioners  understand 
and  believe  the  facts  to  be  as  follows : — 

The  Erie  Railroad  purchased  of  the  Boston,  Hartford  and 
Erie  Railroad  Berdell  mortgage  bonds  to  the  amount  of 
$5,000,000,  agreeing  to  give  therefor  $4,000,000.  Of  this, 


41 

they  paid  the  sum  of  $2,000,000,  which  was  the  money  above 
mentioned  as  having  been  put  on  deposit,  and  gave  their  accept- 
ances for  the  sum  of  $1, 570,400.  They  have  seen  the  original 
and  annex  a  copy  of  one  of  them,  and  so  far  as  form  and  con- 
sideration is  concerned  everything  appears  to  be,  and  in  their 
judgment  is,  correct.  On  the  8th  day  of  October,  1867,  the 
Erie  Railroad  Company  agreed  with  the  Boston,  Hartford  and 
Erie  Railroad,  in  writing,  a  copy  of  which  is  in  the  Commis- 
sioners' hands,  to  guaranty  the  payment  of  the  interest  upon 
$4,000,000  of  the  bonds,  secured  by  the  Berdell  mortgage,  to 
the  holders  thereof,  which  guaranty  was  to  be  in  these  words, 
"  In  consideration  of  the  provisions  of  a  contract  of  even  date 
for  the  use  of  the  Boston,  Hartford  and  Erie  Railroad  by  the 
Erie  Railway  Company,  the  Erie  Railway  Company  hereby 
agrees  with  the  holder  of  this  bond  that  the  several  interest 
warrants  hereto  attached  shall  be  paid  as  they  respectively 
mature.  Witness  the  seal  of  the  Erie  Railway  Company  and 
the  signature  of  its  secretary  of  the  City  of  New  York,  the 
8th  day  of  October,  A.  D.  1867." 

The  Commissioners  are  in  possession  of  an  original  opinion, 
in  writing,  given  by  D.  B.  Eaton  and  William  M.  Evarts, 
Esquires,  of  New  York,  dated  July  30,  1868,  that  the  contract 
of  the  8th  of  October,  1867,  whereby  the  Erie  Railway  Com- 
pany "  agreed  to  be  responsible  for  the  payment  of  interest  on 
bonds  of  the  Boston,  Hartford  and  Erie  Railroad  Company  are 
legal  and  valid  provisions,  and  that  such  bonds  bearing  the 
indorsement  of  the  Erie  Railway  Company  for  the  payment  of 
interest  made  pursuant  to  said  contract,  are  binding  on  that 
company  according  to  the  purport  of  said  contract  and 
endorsement." 

It  would  appear  from  this  opinion  that  the  Erie  Railway 
Company  are  authorized  by  the  laws  of  New  York  to  enter 
into  contracts  to  aid  the  Boston,  Hartford  and  Erie  Railroad 
Company  in  constructing  their  road.  The  acceptances  above 
referred  to  were  made  and  executed  for  this  purpose,  and  if 
the  guaranty  of  the  interest  on  the  bonds  was  a  valid  contract 
under  the  laws  of  New  York,  we  see  no  reason  why  the  accept- 
ances are  not  also  valid. 

In  further  answer,  the  Commissioners  have  the  statement 
under  oath  of  Mr.  Barry,  the  Assistant  Treasurer,  as  aforesaid, 
6 


42 

that  he  knows  nothing  why  the  said  acceptances  are  not  abso- 
lutely and  bona  fide  due  and  payable,  or  why  they  will  not  be 
paid  at  maturity.  The  same  information  is  given  them  by  the 
president  and  other  officers  of  the  company  ;  and  the  Com- 
missioners are  fully  satisfied  that  the  same  are  held  in  good 
.faith  by  the  Boston,  Hartford  and  Erie  Railroad  Company  for  a 
valuable  consideration,  and  with  the  confidence  that  they  can 
and  will  be  duly  paid  according  to  their  tenor. 

The  Commissioners  do  not  undertake  to  express  an  opinion 
upon  the  liability  of  the  acceptors  as  a  matter  of  local  law, 
and  refer,  therefore,  to  the  opinions  of  the  distinguished  gentle- 
men above  mentioned  upon  that  point.  But  if,  as  they  are 
informed  and  believe,  the  Erie  Railway  Company  have  received 
and  made  use  of  as  their  own,  five  millions  of  the  Berdell 
mortgage  bonds,  and  have  accepted  bills  drawn  on  that  com- 
pany for  $1,570,400,  in  part  payment  of  the  same,  the  Com- 
missioners cannot  doubt  that  the  Erie  Railway  Company  are 
liable  therefor,  either  as  acceptors  or  for  the  value  of  the  bonds 
so  purchased,  received  and  used  by  them. 

In  answer  to  the  third  interrogatory  on  page  10,  the  Com- 
missioners state,  as  follows  : — 

They  understand,  as  implied  in  said  interrogatory,  that  of  the 
Berdell  bonds  there  have  been  sold  or  disposed  of  $10,963,000. 

They  understand  that  it  -will  require  the  amount  of  $2,588,- 
500  to  cancel  and  retire  the  outstanding  bonds  secured  by 
mortgages  upon  the  Hartford,  Providence  and  Fishkill  Railroad, 
and  upon  other  parts  of  the  road  of  the  Boston,  Hartford  and 
Erie  Railroad  Company. 

If  to  this  is  added  the  bonds  proposed  to  be  taken  by  the 
State,  84,000,000,  it  will  have  for  the  immediate  use  of  the 
company,  a  balance  in  bonds  of  $2,448,500. 

In  this  the  Commissioners  assume,  that  so  many  of  the  Ber- 
dell bonds  as  will  be  necessary  to  retire  and  cancel  all  out- 
standing bonds  which  form  a  lien  upon  any  part  of  the  road  or 
franchise  of  the  company,  are  to  be  treated  as  if  applied  to  that 
purpose.  But  they  do  not  include  the  $170,000  of  interest  in 
arrear,  for  the  reasons  above  stated,  and  they  assume  the 
balance  due  on  the  bonds  other  than  those  of  the  Hartford, 


43 

Providence  and  Fishkill  road,  at  the  sum  stated  by  the  Council, 
$533,000. 

In  answer  to  the  fourth  interrogatory  of  your  Excellency, 
the  Commissioners  have  no  doubt  that  if  the  loan  of  the 
State  shall  be  made  as  proposed,  the  balance  of  the  Berdell 
bonds  could  be  at  once  sold  for  cash  in  the  market  as  high  as 
the  present  market  value  ;  and  their  belief  is,  that  the  price 
would  in  that  event  rise  considerably  above  the  present  market 
value. 

And  as  for  the  50,000  shares  of  stock,  responsible  gentlemen 
have  offered,  in  writing,  and  the  same  is  now  in  the  Commis- 
sioners' hands,  to  give  and  pay  81,000,000  for  said  50,000 
shares,  and  the  Commissioners  believe  this  offer  to  be  ~bona  fide 
made. 

In  reply  to  your  Excellency's  last  and  general  inquiry,  the 
Commissioners  would  respectfully  present  their  views  by  the 
following  exhibit,  which  they  believe  is  justified  and  sustained 
by  the  facts  already  in  possession  of  your  Excellency. 

Taking  Mr.  Ashburner's  original  calculations  for  construc- 
tion and  equipping  the  road,  ....  $ 8,850,000  00 
Add  to  this  the  balance  of  the  floating  debt,  .  604,434  00 


It  makes  an  aggregate, ;  $9,454,434  00 

The  assets  or  means  of  the  Company  already  paid  towards  con- 
struction, as  stated  by  the  report  of  the  Council,  $500,000  00 
Acceptances  of  Erie  road,  ....  1,570,400  00 
Loan  of  the  Commonwealth,  ....  3,000,000  00 
Seventy  per  cent,  on  balance  of  Berdell  bonds,  1,713,950  00 
Cash  on  hand  on  deposit,  ....  824,427  00 

"     on  call  loan, 530,511  00 


$8,139,288  00 

By  the  returns  of  the  doings  of  the  roads  the  last  year,  the 
net  earnings  of  the  Hartford,  Providence  and  Fishkill  were 
$142,688.62,  and  those  of  the  other  parts  exceeded  the  cost  of 
running  the  same  and  repairs,  so  that  it  would  seem  a  fair 
estimate  to  offset  the  accruing  interest  against  the  earnings  of 
roads. 


There  will  then  be  left  to  be  provided  for  over  and  above  the 
assumed  cash  assets  of  the  company, .  .  .  11,315,146  00 

This  amount  of  floating  debt,  which  is  all  that  would  be  out- 
standing at  the  completion  of  the  road,  due  from  a  company 
which  had  expended  the  foregoing  amount  in  the  construction 
of  its  road,  with  no  other  large  liabilities  maturing  before  July, 
1872,  would  not  materially  impair  or  affect  their  ability  to  com- 
plete the  road  by  the  time  required  by  the  Act.  But  it  is  also 
to  be  borne  in  mind,  that  the  company  is  in  possession  of  stock 
which  is  alleged  to  be  of  the  value  of  $1,000,000,  and  that,  in 
the  above  estimate,  the  bonds  of  the  company  available  to  them 
are  estimated  at  seventy  per  cent.  only. 

And  in  view  of  what  now  appears  to  them  from  the  foregoing 
facts  and  the  apparently  prosperous  condition  of  the  enterprise, 
the  Commissioners-  respectfully  report  their  confidence  and 
belief  that  the  company  have  the  ability  to  complete  the  road 
within  the  time  prescribed  by  the  Act,  if  the  work  should  be 
carried  on  with  energy,  and  the  funds  and  resources  of  the 
company  are  prudently  and  honestly  appropriated  and  applied. 

GEO.  TYLER  BIGELOW, 
EMORY  WASHBURN, 
S.  ASHBURNER, 

Commissioners. 


BOSTON,  HARTFORD  AND  ERIE  RAILROAD  Co.,        ) 
OFFICE  OF  THE  TREASURER,  BOSTON,  Sept.  16, 1868.  j 

Memorandum  of  $2,000,000  held  by  Boston,  Hartford  and  Erie 
Railroad  Company. 

Paid  on  account  Floating  Debt,       .        .  .  $418,553  46 

"     N.  C.  Munson,  on  account,      .      -..  .  226,507  38 

Memorandum  of  A.  G.  Farwell  &  Co.,    .  .  530,511  40 

On  hand  in  Bank  of  Commerce,      .        .  .  824,427  76 

Total, $2,000,000  00 

H.  S.  BARRY,  A.   Treas. 


45 


[E.] 

COMMONWEALTH    OF    MASSACHUSETTS. 

EXECUTIVE  DEPARTMENT, 
BOSTON,  September  24,  1868. 

To  the  Directors  of  the  Boston,  Hartford  and  Erie  Railroad 

Company  : 

GENTLEMEN  : — I  invite  your  attention  to  a  few  questions 
which  have  not  been  answered  to  my  entire  satisfaction,  and 
which,  to  avoid  delay,  I  propound  directly  to  you.  I  inclose 
copies  of  the  communications  which  have  been  made  to  me  by 
commissioners,  since  they  are  referred  to  in  this  communication. 

1.  In  their   first  report,  the  commissioners   allowed   about 
•$70,000  for  certain  claims  presented  to  them,  besides  referring 
to  certain  other  claims,  mentioned  on  page  5  of  my  communi- 
cation to  them.     In  their  present  report,  the  $70,000  is  reduced 
to  $6,000   on  the  statement  of  Mr.   Graves ;  and   the   other 
claims  are  not  adverted  to. 

2.  As  to  the   relations  of  the  Boston,  Hartford  and  Erie 
Company  to  the  Providence  and  Fishkill :  A  contract  is  referred 
to,  which  has  not  been   produced.     On  what  terms  can  the 
former  company  get  possession  of  the  latter  company's  road  ? 

3.  Upon  the  interest  question  :  assuming  that  the  road  will 
be  finished  in  May,  1872,  there  appear  to  be   the  following 
sums  for  interest,  due  before  that  time  : — 

Two  years'  interest  on  the  interest  notes  of 
$1,127,744,  that  is,  interest  falling  due  July, 
1870,  January  and  July,  1871  and  January, 
1872,  at  seven  per  cent.,  ....  $157,884  00 

Three  and  a  half  years'  interest — that  is  from 
January,  1869,  to  January,  1872,  including 
both  dates — on  $5,090,000  Berdell  .bonds,  as 
by  letter  of  commissioners,  at  seven  per  cent.,  1,247,050  00 

Interest  on  $6,000,OOOuBerdell  bonds  additional, 
now  sold  or  exchanged,  July,  1870,  and  there- 
after two  years,  at  seven  per  cent.,  .  .  840,000  00 


46 

Interest  on  $5,000,000  Berdell  bonds  left  remain- 
ing, of  which  $2,600,000  in  round  numbers 
will  be  used  to  retire  the  rest  of  the  outstand- 
ing bonds,  and  $2,400,000  will  be  sold — two 
years'  interest  being  that  falling  due  July, 
1870  and  thereafter, $700,000  00 

Interest  now  overdue  on  outstanding  bonds,  as 

by  commissioners'  letter,  ....  50,000  00 


$2,994,934  00 

Interest  on  floating  debt — balance  $609,000  (depending  on 
when  it  becomes  due.) 

Interest  on  State  scrip,  from  time  when  it  is  issued. 

The  commissioners  report  that  the  probable  earnings  may  be 
assumed  as  sufficient  to  take  care  of  the  interest. 

4.  It  is  said  that  the  Erie  Railroad  bought  $5,000,000  of 
Berdell  bonds  for  $4,000,000,  paying  $2,000,000  in  money,  and 
$1,570,400  in  acceptances. 

$2,000,000  00  $4,000,000  00 

1,570,400  00  3,570,400  00 


$3,570,400  00  $429,600  00 

In  what  manner  do  they  receive  payment  for  the  balance  ? 

5.  Law  question  as  to  acceptances. 

"  The  Erie  Railroad  Company,  for  the  purpose  of  aiding  the 
Boston,  Hartford  and  Erie  Railroad  Company  in  the  construc- 
tion of  their  railroad,  having  bought  of  the  latter  company  their 
mortgage  bonds  to  the  amount  of  $5,000,000,  and  received  the 
same,  agreeing  to  pay  for  the  same  the  sum  of  $4,000,000,  and 
having  paid  therefor  partly  in  money  and  partly  by  giving  their 
acceptances  payable  at  various  dates  hereafter  ;  the  question  is, 
whether  said  acceptances  are  legally  binding  upon  the  Erie 
Railroad  Company,  and  whether  individual  stockholders  of  that 
company  can  legally  prevent  the  payment  thereof  by  injunction 
or  otherwise,  and  whether  or  not  there  was  anything  in  the 
action  of  the  legislature  of  New  York  of  last  winter  affecting 
this  subject." 

ALEXANDER  H.  BULLOCK. 


47 


BOSTON,  September  26, 1868. 
To  His  Excellency  Hon.  A.  H.  BULLOCK: — 

Dear  Sir, — Your  favor  of  the  24th  iiist.  was  duly  received, 
and  in  reply,  we  have  the  honor  to  submit  the  following 
answers  to  your  interrogatories. 

Yery  respectfully  yours, 

JOHN  S.  ELDREDGE. 
HENRY  N.  FARWELL. 
JAMES  S.  WHITNEY. 
J.  W.  CONVERSE. 

1.  In  answer  to  question  No.  1  of  His  Excellency,  (of  this 
date,)    the   Boston,    Hartford  and   Erie   Railroad    Company 
answer :  That  the  commissioners  .published  notices,  asking  for 
all  claims  to  be  shown,  which  any  had  against  the  franchises  or 
estates  which  the  Boston,  Hartford  and  Erie  Railroad  Company 
held,  and  the  claims  brought  in  were  submitted  to  this  com- 
pany.    Between  the  time  of  the  first  and  second  report,  sundry 
of  them  were  taken  up,  and  on  the  day  of  the  statement  of 
Mr.  Graves,  the  amount  of  the  claims  presented  were  believed 
to  be  only  valid  to  less  than  six  thousand  dollars.     The  com- 
missioners have  the  original  claims. 

2.  The  contract  with  the  Hartford,  Providence  and  Fishkill 
Railroad  Company,  referred  to,  was  furnished  the  honorable 
commissioners.     It  was  in  reference  to  the  purchase  and  sale 
of  said  Hartford,   Providence  and   Fishkill   Railroad   to   the 
Boston,  Hartford  and  Erie  Railroad  Company.     The  purchase 
was   made  under  special   power  from  legislatures  of  Rhode 
Island   and   Connecticut,  and   the   conveyance   was   by  deed. 
There  is  no  provisions  as  to  having  possession  of  the  road,  other 
than  found  in  the  mortgage  deeds.     These  provide  that  when- 
ever all  overdue  debt  and  interest  secured  under  the  mortgages 


^ 


48 

are  paid,  the  road,  &c.,  shall  be  given  to  its  owner,  i.  e.,  the 
Boston,  Hartford  and  Erie  Railroad  Company.  Of  the  bonds 
secured,  one  million  is  due  in  1876.  The  balance  is  overdue 
on  the  face  of  bonds,  but  the  trustees  advise  us  they  have,  with 
contract  with  holders  of  the  overdue  bonds,  attached  new  cou- 
pons, to  fall  due  semi-annually,  until  1876,  and  that  thus  the 
payment  of  the  principal  is  extended  until  that  time.  But  at  the 
most,  on  payment  of  one  million  of  dollars,  and  back  interest 
of  less  than  one  hundred  and  fifty  thousand  dollars,  possession 
can  be  had  at  once.  There  is  a  sinking  fund  against  the  above 
bonds,  of  about  two  hundred  thousand  dollars. 

3.  Upon  the  interest  question  :  (1.)  The  written  contracts  for 
construction  of  our  road  from  Boston  to  the  Hudson  River  pro- 
vide for  the  completion  of  the  whole  line  before  1870  ;  and  so  the 
item  for  interest  to  accrue  on  the  interest  notes  to  fall  due  after 
January,  1870,  it  seems  to  us,  should  not  stand  as  a  charge 
against  our  ability  to  complete  the  road.  (2.)  The  interest  on 
.the  $5,090,000  Berdell  bonds  must  be  paid  from  earnings,  or 
bonds  or  notes.  This  will  be  a  year's  interest  on  them  before 
completion  of  the  road.  (3.)  Interest  on  $6,000,000  not  sold, 
reckoned  at  $810,000,  after  1870,  we  consider  should  not  now 
enter  into  the  account.  (3£.)  Interest  on  15,000,000,  left  re- 
maining, we  consider  not  to  be  accounted,  for  we  do  not  expect 
to  sell  them  until  the  cash  on  hand  and  the  State  aid  is 
exhausted.  (4.)  Interest  on  $50,000,  overdue  interest  on  out- 
standing bonds.  Our  answer  to  this  to  commissioners  was,  and 
we  repeat  it  here :  The  old  bonds  are  being  exchanged  daily, 
and  we  expect  all  that  amount,  or  most  of  it,  will  be  absorbed 
in  interest  notes  to  fall  due  in  1872,  and  so  not  a  charge  on 
any  present  funds  or  bonds.  (5.)  Interest  on  floating  debt  we 
regard  a  proper  present  charge. 

The  income  on  our  running  roads  today  show  us  we  can 
from  that  source  pay  the  interest  on  all  bonds  out,  and  such  as 
will  be  put  out,  including  any  State  aid  bonds,  and  that  when 
our  road  is  completed  to  Willimantic,  which  is  contracted  to  be 
done  within  a  year,  that  then  the  income  will  exceed  any  bonds 
or  other  indebtedness  out.  This  is  believed  to  be  true,  with  no 
road  completed  beyond  Waterbury.  This,  we  understand,  to 
be  the  opinion  of  the  honorable  commissioners. 


49 

4.  The  four  hundred  twenty-nine  thousand  six  hundred  dol- 
lars inquired   about:  Of   this   amount,    three    hundred    and 
twenty-five  thousand  dollars  ($325,000)  is  in  hand  and  present 
available  funds,  cash,  in  possession  of  the  president  and  vice- 
president,  and  the  balance  has  been  expended  in  the  construc- 
tion account  of  the  railway. 

5.  Acceptances :  The  opinion  of  Mr.  Evarts  and  others  was 
had  as  to  power  of  Erie  Railway  Company  to  contract  with  and 
indorse  the  bonds  of  this  company,  and  since  the  question  has 
been  raised  on  the  acceptances,  we  have  sent  for  and  obtained 
Mr.  Evarts's  opinion  in  the  above  matter.     We  take  pleasure  in 
handing  herewith  that  opinion.     Hope  it  will  be  found  to  give 
your  Excellency  the  same  confidence  in  our  course,  we  feel 
ourselves. 


50 


NEW  YOBK,  September  25, 1868. 

MY  DEAR  SIR  : — I  understand  that  an  opinion  is  desired  from 
me  upon  the  following  question,  arising  upon  the  relations  of 
the  Erie  Railway  Company  and  the  Boston,  Hartford  and  Erie 
Railroad  Company,  in  the  transaction  of  the  purchase  of  the 
bonds  of  the  latter  company  by  the  Erie  Railway  Company. 

The  purchase  of  the  bonds  of  the  Boston,  Hartford  and  Erie 
Company  was  made  by  the  Erie  Railway  Company  upon  the 
advice  of  counsel  that  the  transaction  was  within  the  compe- 
tency of  that  company,  and  that  consequently  a  contract  for 
the  purchase,  in  whole  or  in  part  executory,  could  be  enforced 
against  the  Erie  Railway  Company.  Upon  this  opinion  the 
acceptances  of  the  Erie  Railway  Company,  still  held  by  the 
Boston,  Hartford  and  Erie  Railroad  Company,  representing  a 
portion  of  the  price  paid  for  the  bonds,  are  understood  to  be 
valid  and  enforceable  by  law. 

Now  the  question  proposed  to  me  is,  what  would  be  the  legal 
position  of  the  Boston,  Hartford  and  Erie  Company  towards 
the  Erie  Railway  Company  in  case,  upon  a  refusal  of  the  latter 
to  pay  these  acceptances,  their  collection  should  be  defeated  at 
law,  on  the  ground  that  the  purchase  of  the  bonds  was  ultra 
vires,  and  the  acceptances  of  the  company  given  therefor  could 
not  be  enforced  ?  I  do  not  understand  that  this  question  is 
raised  upon  any  interest  or  intent  of  the  Erie  Railway  Company 
thus  to  avoid  the  payment  of  the  acceptances,  or  in  any  doubt 
of  the  validity  of  the  same  on  the  part  of  the  Boston,  Hartford 
and  Erie  Company,  but  for  the  purpose  of  ascertaining  what 
would  be  the  rights  of  the  two  companies  in  case  the  direct 
collection  of  the  acceptances  should  be  successfully  resisted. 

I  have  given  this  question  consideration,  but  have  only  an 
opportunity,  at  present,  to  state  the  conclusion  to  which  I  have 
come. 

If  the  Erie  Railway  Company  should  avoid  the  payment  of 
the  acceptances  outstanding  in  part  payment  of  the  contract 


51 

price  for  the  bonds  purchased,  on  the  ground  that  the  contract 
was  beyond  the  competency  of  the  purchasing  company,  I  am 
of  opinion  that  the  Boston,  Hartford  and  Erie  Company  would 
be  able  to  maintain  an  equitable  action  for  the  restoration  of 
the  bonds  which  formed  the  consideration  of  the  contract  thus 
repudiated,  and,  in  so  far  as  the  Erie  Railway  Company  should 
prove  unable  to  make  such  restoration,  for  an  account  of  the 
proceeds  or  value  of  the  bonds  sold  or  disposed  of  by  the  Erie 
Railway  Company,  I  understand  the  law  now  to  be  well  set- 
tled that  a  corporation  repudiating  a  contract  as  ultra  vires 
cannot  retain  the  fruits  of  that  contract  as  if  it  had  acknowl- 
edged and  performed  it. 

The  practical  consequence,  then,  in  the  actual  case  proposed 
to  me,  would  be  that  the  Boston,  Hartford  and  Erie  Company 
would  be  protected  from  loss  upon  the  hypothesis  that  the 
outstanding  acceptances  should  be  held  invalid  upon  the  ground 
suggested. 

I  am,  with  great  respect, 
Yours,  very  truly, 

WM.  M.  EYARTS. 

JNO.  S.  ELDRIDGE,  ESQ.,  Pres't,  ^c.,  Sfc. 


0f 
gtpaffirtent 


[F.j 

COMMONWEALTH    OP    MASSACHUSETTS. 

ATTORNEY  GENERAL'S  OFFICE, 
BOSTON,  30  COURT  STREET,  Oct.  1, 1868. 

SIR  : — The  opinion  of  Mr.  Evarts,  which  you  have  inclosed 
to  me,  although  not  in  terms  covering  the  element  of  the  effect 
of  the  action  or  non-action  of  the  legislature  of  New  York, 
which  was  embraced  in  your  question,  yet  may  well  be  received 
as  a  satisfactory  answer  to  the  question,  and  a  solution  of  the 
doubt  as  to  the  legal  liability  of  the  Erie  Railroad  Company 
upon  their  contract,  for  the  practical  purposes  of  the  present 
inquiry. 

I  have  the  honor  to  be, 
Very  respectfully, 

Your  obedient  servant, 

CHARLES  ALLEN. 
His  EXCELLENCY  THE  GOVERNOR. 


53 


[G.] 

COMMONWEALTH    OF   MASSACHUSETTS. 

ATTOKNEY  GENERAL'S  OFFICE,      ) 
BOSTON,  30  COURT  STREET,  October  6, 1868.  j 

SIR  : — As,  at  the  close  of  your  own  investigations  into  the 
matters  involved  in  the  application  of  the  Boston,  Hartford  and 
Erie  Railroad  Company,  it  will  be  convenient  for  you  to  have 
my  conclusions  upon  those  questions  in  respect  to  which  my 
concurrent  action  is  required,  I  beg  to  say,  having  reference*  to 
my  former  report  of  August  21,  in  addition  thereto,  as  follows  : 

I  am  now  satisfied — 

1.  That  the  Berdell  mortgage  has  been  duly  recorded. 

2.  That  the  mortgage  debts  secured  by  the  underlying  mort- 
gages, referred  to  in  section  2  of  the  Act,  have  been  reduced  to 
less  than  one  million  dollars,  and  so  far  below  that  sum  that 
the  bond  recommended  by  the  committee  of  the  Council  will 
render  a  more  exact  result  unnecessary. 

3.  That  the  company  has  properly  expended  two  hundred 
thousand  dollars  in  construction  of  new  road  and  in  the  pur- 
chase of  equipment,  as  required  in  the  same  section. 

I  have  the  honor  to  be, 

Very  respectfully, 

Your  obedient  servant, 

CHARLES  ALLEN. 
His  EXCELLENCY  THE  GOVERNOR. 


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